Stock Rerating Enerplus buying back 200 million in share over a short time frame was a brillant move.
Enerplus has a prestine balance sheet, just bought back roughly 18-20 million shares, and has one of the lowest dividends in the industry (1%).
The market is looking for returns, there are literally billions of dollars eager to buy and stock with 5-6 percent return, and will pay a 19 multiple for it. This is what they are paying for companies like FRU, and TPZ.
Next year enerplus will have 773 million in adjusted income, and has no requirement for more share buy back or debt repayment.
If the company were to announce a dividend in the 14 cent a month, about 55% of their 2022 adjusted earnings, the stock would pay a 5.3 percent dividend and it would likely trade in the 32 dollar Canadian range. (19 X Dividend)
It is great that ERF did all these buy backs while they were paying a 1% dividend. The company is trading at 22.4% adjusted free cash flow to maket cap, one of the highest in the industry.
With a improved market evaluation (higher share price), ERF can use their shares as cash and all the companies that they want to pick up would be accretive, and they could just keep increasing the dividend.
The condition of the balance sheet, strong cash flow, low debt and low share count give ERF the opportunity to ramp up their market cap with meaningful returns to shareholder. Then they can use their stock as currency and go to town. No more growth off the balance sheet, on through acccretive acquisition.
IMHO