NEW YORK (Reuters) – Corporate stock buybacks are offering investors a measure of excitement in what has been a gloomy earnings season.
Chevron Corp late last month said it would triple its budget for share buybacks to $75 billion.
The oil major’s announcement was followed last week by Meta Platforms Inc, the parent of Facebook which last week unveiled a $40 billion buyback.
Bolstered by those announcements, corporate buybacks are on pace for a stronger start to 2023 than a year ago in terms of dollar value — though fewer companies are announcing them. Here’s a closer look at buyback trends:
** Companies have announced $173.5 billion worth of planned buybacks so far this year, just over double last year’s pace, according to data from EPFR TrimTabs as of Monday. In 2022, buyback announcements reached a record $1.22 trillion, according to EPFR TrimTabs.
** However, fewer companies have announced buybacks so far this year. So far in 2023, 78 companies have announced buybacks compared with 125 companies as of this time last year, according to EPFR TrimTabs, which tracks announcements by companies listed on the New York Stock Exchange, Nasdaq and American Stock Exchange.
** S&P 500 companies are expected to have completed $220 billion in buybacks during the fourth quarter of 2022, according to S&P Dow Jones Indices. That is up from $210.8 billion in the third quarter, but down from $270 billion in the fourth quarter of 2021.
** 2023 should be the first fiscal year with at least $1 trillion in completed S&P 500 company buybacks, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
** Buybacks have contributed 3.7% to S&P 500 earnings-per-share growth for the fourth quarter, according to data from Credit Suisse as of Friday. Overall, S&P 500 earnings are on track to have declined 2.1% in the quarter as of Friday, according to Credit Suisse.
** The S&P 500 buyback index, which is designed to measure performance of stocks with the highest buyback ratios, was up 8.9% in 2023 as of Friday versus a 7.7% gain for the broad S&P 500 during that time. The buyback index fell 12.7% in 2022 versus a 19.4% drop for the overall S&P 500.
(Reporting by Lewis Krauskopf; editing by Jonathan Oatis)
