Sunday, December 16, 2007

Buybacks Exceed Earnings in Third Quarter 2007

In the third quarter of this year, Standard & Poor's reports buybacks totaled $171.95 billion dollars in 3Q versus reported earnings of $133.84 billion. Dividends plus buybacks totaled $232.79 billion. Since the beginning 2001, companies have returned nearly 91% of cumulative reported earnings ($3,363 billion) to shareholders via dividends and buybacks combined ($3,052 billion).

(click on chart for larger image)

third quarter 2007 stock buyback chart
As S&P notes, not all companies highlight the impact of share repurchases on earnings per share.
"As a result, P/E and growth evaluations that were not adjusted for the share count reduction effect reflected a higher premium paid for operating earnings."
Standard & Poor's provides the following illustration:

third quarter 2007 eps impact of stock buyback activityDetailed information on buyback activity in the third quarter is contained in S&P's buyback report.

S&P 500 Buybacks: Three Years and $1.3 Trillion Later (pdf)
Standard & Poor's
By: Howard Silverblatt & Dave Guarino

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