PreMarket Prep Stock Of The Day: Hertz Buyback Program Drives Stock Rally

Individual issues do not react in the same way to a company's efforts to enhance shareholder value.

A good example of this is the price action between FedEx Corporation FDX, which made such an announcement on Tuesday, and Hertz Global Holdings Inc HTZ on Wednesday.

The price action in Hertz makes it the PreMarket Prep Stock of the Day.

FedEx's Announcement: Before the opening on Tuesday, the company announced, as part of a move to drive shareholder value, an increase in its dividend, an enhanced executive compensation program and the addition of two independent directors to its board.

FedEx raised its quarterly dividend from 75 cents per share to $1.15 per share.

To The Moon, Alice: Following a robust $20 rally in premarket trading, FedEx added $9 during the regular session. The net result was a gain of $28.97 or 14.5% for one of its best sessions over the last few years.

The upward momentum has carried over into Wednesday’s session.

Hertz's Announcement: Before the open Wednesday, Hertz announced its board approved a new $2-billion share repurchase program in addition to the $2 billion in buybacks that were announced in November.

With approximately $200 million remaining on the previous buyback, Hertz now has a total of $2.2 billion available under the share repurchase programs.

PreMarket Prep's Take: Obviously, the measures taken by FedEx were more extreme than Hertz, but investors still reacted in a positive manner. When the issue was being covered on the show it was trading higher by nearly $1 at $18.15.

After witnessing the price explosion in FedEx on Tuesday, the author of this article was very hesitant to stand in the way of good news. Investors were alerted to the premarket high ($18.80) as a potential resistance area if the issue was able to mount another rebound.

HTZ Price Action: Following a $1-plus higher open, the issue had a brief retreat, but found buyers well ahead of the top of Tuesday’s range ($17.39), only reaching $18.14.

Since making that intraday low it has pierced the premarket high, reaching $19. That high coincides with its June 8 of $19.04. It has backed off from the high and has been consolidating at the $18.80 area over the last hour.
Hertz shares were trading 5.16% higher at $18.13 Wednesday afternoon. 

The discussion on the issue from Wednesday’s show can be found here:

Photo via Shutterstock.