Why U.S. Silica Holdings' Shares Jumped
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 U.S. Silica Holdings (NYS: SLCA) jumped 10% briefly today after the company announced a share buyback program.
So what: Management said that the board of directors authorized a $25 million stock repurchase program to be completed over the next 18 months. This will be in addition to normal capital expenditures and will use available cash on hand.
Now what: Management thinks the stock is cheap and you can see why when you look at the numbers. The trailing P/E ratio is 13.1 and the forward P/E ratio is just 5.8, an extremely low valuation. Add to that the fact that the company has crushed earnings estimates in the last two quarters and it looks like a good use of cash. I think this will be a catalyst for the stock moving higher, especially if the good performance continues.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.