Buyback Wednesdays – Valero Energy’s $2.5 Billion Buyback Plan

Stock buyback announcements continued to stay muted last week with only 6 companies announcing buybacks. We still have a few days left for earnings season and can expect to see an increase in buyback activity in the coming weeks.

Three of the six companies that announced buybacks last week belong to the energy sector. The most significant one was Valero Energy (VLO). On Thursday, July 7, 2022, the Board of Directors of Valero Energy approved a new share purchase authorization of up to $2.5 billion of its common stock, which replaces its previous purchase authorization announced on January 23, 2018. Valero has purchased approximately 45.4 million shares of its common stock since 2018 and retired 5.56% of their shares outstanding after adjusting for dilution. While this might not seem much, the company bought back shares at a very difficult time for the energy sector.

For the first quarter of 2022, Valero Energy reported net income of $905 million, or $2.21 per share, compared to a net loss of $704 million, or $1.73 per share, for the first quarter of 2021. Net cash provided by operating activities was $588 million in the first quarter of 2022.  Its annual long-term total payout ratio is between 40% and 50% of adjusted net cash provided by operating activities. The current yield is 3.74% and I would not be surprised to see the dividend go up in the next few quarters.

The company also returned $545 million in cash to stockholders in the first quarter, with $401 million paid as dividends and $144 million in stock buybacks. It has $8.93 billion in net debt.

                                                                                             Valero Energy (VLO) 

 

Welcome to edition 15 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week. The companies in the list below are the ones that announced the largest buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap stocks with a market cap below $2 billion.

Top 5 Stock Buyback Announcements 

1. SciSparc Ltd. (SPRC): $1.83

On July 06, 2022, the Board of Directors of this biopharmaceutical company approved a new share repurchase program authorizing the company to repurchase up to $1 million of its class A common stock, equal to nearly 12.6% of its market cap at announcement.

Market Cap: $13.27M Avg. Daily Volume (30 days): 209,288 Revenue (TTM): N/A
Net Income Margin (TTM): N/A ROE (TTM): -120.97%  Net Cash: $6.82M
P/E: N/A Forward P/E: N/A EV/EBIDTA (TTM): -1.12

2. Energy Services of America Corporation (ESOA): $1.93

On July 06, 2022, the Board of Directors of this oil and gas equipment and services company approved a new share repurchase program authorizing the company to repurchase up to $1.96 million of its class A common stock, equal to nearly 6% of its market cap at announcement.

Market Cap: $32.50M Avg. Daily Volume (30 days): 153,862 Revenue (TTM): $142.90M
Net Income Margin (TTM): 8.15% ROE (TTM): 40.34%  Net Debt : $4.62M
P/E: 2.71 Forward P/E: N/A EV/EBIDTA (TTM): 4.35

3. Ranger Oil Corporation(ROCC): $30.25

On July 07, 2022, the Board of Directors of this independent oil and gas company approved an additional share repurchase program authorizing the company to repurchase up to $40 million of its class A common stock equal to nearly 5.95% of its market cap at announcement.

Market Cap: $1.38B Avg. Daily Volume (30 days): 878,916 Revenue (TTM): $709.54M
Net Income Margin (TTM): 6.18% ROE (TTM): 19.2%  Net Debt: $184.15M
P/E: 11.45 Forward P/E: 2.9 EV/EBIDTA (TTM): 4.65

4. Valero Energy Corporation (VLO): $29.69

On July 07, 2022, the Board of Directors of this manufacturer and marketer of transportation fuels and petrochemical products approved a new share repurchase program authorizing the company to repurchase up to $2.5 billion of its class A common stock equal to nearly 5.8% of its market cap at announcement.

Market Cap: $43.68B Avg. Daily Volume (30 days): 7,594,510 Revenue (TTM): $125.77B
Net Income Margin (TTM): 2.02% ROE (TTM): 14.7%  Net Debt: $8.93B
P/E: 17.24 Forward P/E: 8.92 EV/EBIDTA (TTM): 8.41

5. Alta Equipment Group Inc. (ALTG): $9.35

On July 12, 2022, the Board of Directors of this industrial equipment wholesale trader approved a new share repurchase program authorizing the company to repurchase up to $12.5 million of its class A common stock equal to nearly 4.1% of its market cap at announcement.

Market Cap: $288.52M Avg. Daily Volume (30 days): 90,379 Revenue (TTM): $1.28B
Net Income Margin (TTM): -1.28% ROE (TTM): -11.46%  Net Debt: $726.6M
P/E: 7.29 Forward P/E: N/A EV/EBIDTA (TTM): 8.78

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