Q: hi folks, can you please comment on the update given by Surge energy sgy/t....$37M asset sale, paydown in debt, etc.....would U view as positive???, & rate as Buy/Hold/Sell.....stock has been a real laggard for me....thx as always, jb
5i Research Answer:
We think this is a positive move from SGY and the company highlighted that it will be 'accelerating returns to shareholders.' The company forecasts an excess of $52M annually of free cash flows of which $48M is to be allocated to share buybacks and continued net debt reduction. The Company is targeting a return of up to 50 percent of excess FCF to shareholders through buybacks. The remaining $4M will be allocated to increasing SGY's dividend from $0.48 annually to an anticipated $0.52 annually (8 percent increase). We continue to think SGY is a hold for income and the recent transaction is a positive that should be accretive for shareholders.