Why Mechel's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Russian mining and metals company Mechel OAO (NYSE: MTL  ) jumped 12% today after announcing a huge buyback program.

So what: Management announced a $100 million buyback program, which will be made on the open market or in private transactions. At today's stock price, that represents about 7.6% of the shares outstanding for the company.  

Now what: Share buybacks are one of the ways management can return cash to shareholders, and it is often preferred over dividends, because it raises earnings per share by lowering share count. Even before the announcement, shares traded at just 7 times forward earnings estimates, so with a lower share count, that figure could improve as long as expectations are met. This is a short-term catalyst for traders, but long-term, it's still about financial results, and with first-quarter revenue down 16% there are a lot of questions outstanding and I'd like to see finances improve before jumping in.

Interested in more info on Mechel OAO? Add it to your watchlist by clicking here


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2496533, ~/Articles/ArticleHandler.aspx, 10/23/2014 4:16:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement