Which Company Had the Best Stock Buyback Last Quarter: Halliburton, Baker Hughes, or Schlumberger?

Photo credit: Flickr/Francisco Diez 

The world's top three oil-field service companies -- Halliburton (NYSE: HAL  ) , Schlumberger (NYSE: SLB  ) , and Baker Hughes (NYSE: BHI  )  -- are buying back stock hand over fist. The trio combined to buy back nearly $1.6 billion in stock during the last quarter alone. While many stock buybacks are a waste of shareholder capital, these three look to be meaningfully creating value for investors. Let's look at which of the three did the best job buying back stock last quarter.

Buyback overview
Schlumberger led the way, repurchasing $899 million in stock at an average price of $90.31 per share. This is part of a $10 billion buyback program the company's board approved last July. To date, Schlumberger has repurchased $2.6 billion under the program. Schlumberger originally planned to complete the entire $10 billion repurchase plan in five years, but its surging cash flow should enable the company to finish buying back stock in half that time.

Halliburton was No. 2 in stock buybacks last quarter. It repurchased 9 million shares for a total of $500 million, or an average of $55.56 per share. Halliburton has been carrying out a $10 billion buyback plan since 2006. To date, it has bought back 197 million shares at a total cost of $8.1 billion, giving it $1.2 billion left under the current phase of the program.

Finally, Baker Hughes bought back $200 million worth of stock, or 3.4 million shares at an average price of $62.50 per share. Baker Hughes now has $1.45 billion left on its share buyback plan.

Capital well spent
Previous buybacks, combined with earnings momentum, have enabled all three companies to turn in solid stock performances so far this year, as the following chart shows.

HAL Chart

HAL data by YCharts.

The underlying business performance of all three oil-field service giants was strong last quarter, as all three beat earnings estimates. The improving service market boosted each stock, which meant these companies had to be disciplined to avoid overpaying just to buy back shares. As the following chart shows, all three did a fairly decent job not chasing their stock higher -- each company bought back its stock closer to the quarterly low.

Company

Shares Repurchased

Buyback Total

Share price 12/31

Average Buyback Price

Share price 4/21

Return on Buyback

Schlumberger

9,954,601

 $899,000,000.00

 $90.11

 $90.31

 $101.59

12.49%

Halliburton

9,000,000

 $500,000,000.00

 $50.75

 $55.56

 $63.39

14.10%

Baker Hughes

3,400,000

 $200,000,000.00

 $55.26

 $58.82

 $69.88

18.80%

Source: Company press releases and author's calculations.

Investor takeaway
Baker Hughes investors have enjoyed a much higher return on its buyback than Schlumberger and Halliburton. The company bought back its stock for what now amounts to a nearly 19% discount to current pricing. In addition, Baker Hughes' buyback actually resulted in about a half a penny extra in additional diluted per share earnings on the quarter, while the buybacks of both Halliburton and Schlumberger resulted in minuscule accretions of one-tenth of a penny per share. Baker Hughes clearly had the best buyback of the group for the quarter.

OPEC is absolutely terrified of this game-changer
Investing in the energy patch could produce a gusher in profits if you choose the right stock. We think we've found that oil stock, as it sends shivers down OPEC's spine. To find out more, you have to check out our exclusive, brand-new Motley Fool report where we reveal the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock.


Read/Post Comments (2) | 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.

Add your comment.

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: 2932927, ~/Articles/ArticleHandler.aspx, 9/23/2014 8:40:21 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