Thursday, January 05, 2017

Buybacks Decline In Q3 2016, But Cash At Record Level

At the end of December S&P Dow Jones Indices reported information on S&P 500 buybacks and dividends for Q3 2016. The preliminary report noted quarter over quarter buybacks decline 12% and year over year buybacks fell 25.5%. The continued decline in buybacks may be a result of companies retaining cash due to the uncertainty surrounding the November election. Dividends were up fractionally QOQ and up 3.5% on a YOY basis. However, in spite of the decline in buybacks, Howard Silverblatt of S&P Global noted,
"cash reserves also set a new record for the third consecutive quarter, as S&P 500 Industrial (Old), which consists of the S&P 500 less Financials, Transportations and Utilities, available cash and equivalent now stands at $1.49 trillion, up 8.2% from the prior record of $1.37 trillion. The current cash level is nearly double [that] of expected 2017 operating income, giving corporations leeway in their expenditures."

Other key highlights from S&P Dow Jones Indices' report,
  • Information Technology continued its buybacks dominance, even as its overall percentage of S&P 500 buybacks decreased to 23.2% ($26.0 billion) in Q3 2016, from 23.6% ($30.1 billion) in Q2 2016.
  • Apple (AAPL) spent the most on buybacks in Q3 2016, at $6.0 billion, down from $10.2 billion in Q2 2016 and $13.3 billion spent in Q3 2015.
  • Microsoft (MSFT) was second, with $4.4 billion, up from $3.7 billion in Q2 2016.
  • Energy saw its contribution increase but overall expenditures decline, to 1.20% ($1.34 billion) in Q3 2016, compared to 1.09% ($1.39 billion) in Q2 2016 and 6.07% ($8.8 billion) in Q3 2014.
  • Industrials decreased its expenditures by 39.4% ($13.3 billion) from $21.9 billion in Q2 2016.
  • Consumer Staples which decreased its expenditures by 28.4% ($8.4 billion) after $11.7 billion in Q2 2016.

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