Two Stocks Surfing Aggressive Buybacks

03/09/2011 11:17 am EST


David Fried

Editor, The Buyback Letter

Reinsurer Endurance and truck renter Ryder can hardly restrain their enthusiasm for their own shares, writes David Fried of David Fried’s Buyback Letter.

We have invested in Endurance Specialty Holdings (NYSE: ENH) several times recently, buying in June 2009 and December 2009. It has floated to the top of our filters again.

In the last 12 months, management has reduced shares outstanding by a whopping 13.8%.

ENH is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes property, casualty, healthcare liability, agriculture, and professional lines of insurance and property, catastrophe, casualty, agriculture, aerospace and marine, surety, and other specialty lines of reinsurance.

Endurance, based in Bermuda, maintains excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best and A (Strong) from Standard & Poor's.

Fourth-quarter net income was $111.2 million. Some other operating highlights:

  • Net premiums written totaled $158.1 million (an increase of 8% over the same period in 2009);
  • Net investment income came to $56.9 million (a decrease of $2.4 million from the same period in 2009);
  • The operating return on average common equity for the quarter was 3.9%, or 15.6% on an annualized basis;
  • Book value of $52.74 per diluted common share, up 1.76% from September 30.

Ryder Rolls Over Competition
Miami-based rental truck company Ryder System (NYSE: R) is a leader in transportation and supply-chain management.

In the last 12 months, management has reduced shares outstanding by 7.8%.

Ryder has also been eating up other companies lately, including:

  • California-based The Scully Cos., a privately owned, regional provider of full-service lease, contract maintenance, commercial rental, and dedicated-contract carriage solutions, primarily serving the western US. The deal is expected to add about $100 million in annualized operating revenue to Ryder.
  • Carmenita Leasing in Santa Fe Springs, Calif., which has about 189 full-service lease and rental units, serving 58 contract customers.
  • Total Logistic Control, which owns 34 facilities comprising 10.6 million square feet of dry and temperature-controlled warehousing across 13 states. The acquisition was completed December 31 for about $200 million, and is expected to add about $250 million in annual revenue.

Ryder financials have been on fire! Fourth-quarter profits more than quadrupled, rising to $37.1 million from $8.2 million for the prior-year period. The jump in profits was accompanied by a 5% increase in revenue, from $1.25 billion to $1.31 billion. Earnings per share were 72 cents, up from 15 cents.

For the full year, Ryder's revenue from continuing operations was $5.14 billion, up 5% from 2009. Ryder's 2010 net earnings were $118.2 million, up 91%, from $61.9 million in the year-earlier period. Earnings per share were $2.25, up 103%

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