Thursday, June 19, 2014

Companies Continue With A Heightened Focus On Share Buybacks

S&P Dow Jones Indices' preliminary report on first quarter 2014 share buybacks shows companies have not shied away from buying back shares in spite of record market highs. On a year over year basis buybacks increased 59% to $159.28 billion versus $99.97 billion in Q1 2013. Combining the buyback amount with the dividends paid, on a YOY basis the combination increased 41%. The buyback leader in the first quarter is Apple (AAPL), buying back $18 billion which set an S&P 500 Index record. Additionally, S&P Dow Jones Indices notes the technology sector dominated in buybacks by representing 30.9% of all buybacks in the quarter. Howard Silverblatt, Senior Index Analyst for S&P Dow Jones Indices noted in the S&P report,
  •  "The lower share count pushed up earnings per share significantly (defined as a 4% impact) for 99 issues in the S&P 500, with the Q1 poster child being Apple."
  • "The key question for Q2 is did they do it to boost a poor Q1 earnings period that was impacted by weather conditions, or was it a shift towards more enhanced earnings via share count reduction, similar to what we experienced in 2006 and 2007?"
From The Blog of HORAN Capital Advisors

Disclosure: Family long AAPL

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