Nabors Industries Ltd. (NBR), the land drilling contractor, announced that it will repurchase shares worth approximately $250 million from UBS Investment Bank. Shares of Nabors fell over 4% in anticipation of this news when the market opened. However, it improved to close at $24.85, marginally higher than the previous close of $24.78.
The company stated that it would buy back 10.375 million of its shares at $24.10 per share. This represents about 40% stake of the investment firm, Pamplona Capital Management.
Management at Nabors added that this repurchase program should be accretive to its earnings per share. Also, this move would facilitate greater returns for long-term shareholders.
Billionaire Alex Knaster’s Pamplona Capital had bought its stake in Nabors two years back, becoming the company’s largest stake owner. Nabors’ stock has shown steady progress since then and has gained over 45% year-to-date.
The company has fared well on the earnings front as well, beating estimates in three of the tailing four quarters with an average positive surprise of 13.20%. Moreover, estimates moving north for both current quarter and current year indicate more bullish sentiment on the stock.
With the leading position in most natural gas and oil-based shale plays, Barbados-based Nabors is a premier player in the North American land drilling market. Additionally, the company has started paying quarterly dividends since last year, which creates further value for shareholders.
Currently, Nabors has a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. market in the next one to three months.
One can also consider other stocks from the same industry like Patterson-UTI Energy Inc. (PTEN), Pioneer Energy Services Corp. (PES) and North Atlantic Drilling Limited (NADL). While Patterson-UTI and Pioneer Energy sport a Zacks Rank #1 (Strong Buy), North Atlantic Drilling holds a Zacks Rank #2.
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