List Of Companies Buying Back Stock 2017
For the first time since the financial crisis, companies have given back more to shareholders than they are making in cash net of capital expenditures and interest payments, or free cash flow, according to Goldman Sachs calculations.
list of companies buying back stock 2017
The level of buybacks to free cash flow hit 104% for the 12 months ending in the first quarter of 2019, the first time that number has topped 100% during the economic recovery that started in 2009. In 2017, the level was 82%.
Goldman projects buybacks for S&P 500 companies to total $940 billion, a 13% increase over the previous year and a new high for a number that has continued to increase through much of the post-financial crisis period. Total buyback executions among all companies this year were up 26% through mid-July.
The rise in buybacks has had a twin effect on corporate balance sheets, both drawing down cash and increasing leverage. It also represents a more-of-the-same trend that has come despite the $1.5 trillion tax cut passed in late 2017. The record cut had spurred hopes that companies would eschew the buyback formula that has helped generate the longest bull market run in Wall Street history and instead lead to more investment in equipment and personnel.
As the Federal Reserve had been raising rates since 2015, Goldman touted companies with strong balance sheets over those with heavy debt-to-earnings levels. That's a trade that worked well from the start of 2017 until the end of 2018, with former returning 21% vs. a 3% loss for the latter, but that's reversed lately.
At a company level, Goldman's list of weak balance sheet companies include AT&T, GM, Automatic Data Processing, Kraft Heinz and Delta Air Lines. Some of the bigger names on the strong balance sheet side include Alphabet, Costco, Mastercard, Facebook and Intuitive Surgical.
JPMorgan Chase has constructed a time series for 1997 through 2018 that estimates the percentage of buybacks by S&P 500 companies that have been debt-financed, increasing the financial fragility of companies. In general, the percentage of buybacks that have been funded by borrowed money has been far higher in stock-market booms than in busts, as companies have competed with one another to boost their stock prices.
In 2018, however, as stock buybacks by companies in the S&P 500 Index spiked to more than $800 billion for the year, the proportion that were financed by debt plunged to about 14% in the last quarter. Why was there a sharp decline in 2018, when the dollar volume of buybacks far surpassed the previous peak years of 2007, 2014, and 2015?
The answer is clear: Corporate tax breaks contained in the Tax Cuts and Jobs Act of 2017 provided the corporate cash for the vastly increased level of buybacks in 2018. First, there was a permanent cut from 35% to 21% in the tax rate on corporate profits earned in the United States. Second, going forward, the 2017 law permanently freed foreign profits of U.S.-based corporations from U.S. taxation (Under the Act, the U.S. Treasury has been reclaiming some tax revenue lost because of a tax concession dating back to 1960 that had enabled U.S.-based corporations to defer payment of U.S. taxes on their foreign profits until repatriating them).
In 2018 compared with 2017, corporate tax revenues declined to $205 billion from $297 billion, hypothetically increasing the financial capacity of U.S.-based corporations to do as much as $92 billion more in buybacks in 2018 without taking on debt. Given that from 2017 to 2018 stock buybacks by S&P 500 companies increased by $287 billion (from $519 billion to $806 billion), the reality is that, through the corporate tax cuts, the federal government essentially funded $92 billion in buybacks by issuing debt and printing money to replace the lost corporate tax revenues.
Whether it is corporate debt or government debt that funds additional buybacks, it is the underlying problem of the corporate obsession with stock-price performance that makes U.S. households more vulnerable to the boom-and-bust economy. Debt-financed buybacks reinforce financial fragility. But it is stock buybacks, however funded, that undermine the quest for equitable and stable economic growth. Buybacks done as open-market repurchases should be banned.
What are stock buybacks?Stock buybacks are when companies buy back their own stock from shareholders on the open market rather than investing in workers or equipment. When a share of stock is bought back, the company reduces the number of shares left in the market, which raises the price of remaining shares. Company executives have every incentive to buy back stocks, since most of their compensation derives from stock and a higher stock price makes them personally richer.
How Buybacks Harm Workers While buybacks are very beneficial to corporate executives and wealthy Wall Street investors, they end up harming workers. Before the stock buyback explosion, companies would often use excess profits to increase worker pay and benefits, to invest in new equipment, or to expand into new markets and create more jobs.
For too long, corporate executives like those at AT&T have decided to prioritize making their short-term share price as high as possible instead of helping the workers who are the backbone of the company. It is time Congress pass the Reward Work Act to ban stock buybacks and help create jobs across the country.
Even more disturbing, there is clear evidence that a substantial number of corporate executives today use buybacks as a chance to cash out the shares of the company they received as executive pay. We give stock to corporate managers to convince them to create the kind of long-term value that benefits American companies and the workers and communities they serve. Instead, what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense.
Those rules, first adopted in 1982, provide companies with a safe harbor from securities-fraud liability if the pricing and timing of buyback-related repurchases meet certain conditions. After experience proved that buybacks could be used to take advantage of less-informed investors, the SEC updated its rules in 2003, though researchers noted that several gaps remained.
What did surprise us, however, was how commonplace it is for executives to use buybacks as a chance to cash out. In half of the buybacks we studied, at least one executive sold shares in the month following the buyback announcement. In fact, twice as many companies have insiders selling in the eight days after a buyback announcement as sell on an ordinary day. So right after the company tells the market that the stock is cheap, executives overwhelmingly decide to sell.
Below you will find a list of companies that have recently announced share buyback programs. Publicly-traded companies often buyback shares of their stock when they believe their company's stock is undervalued. More about stock buybacks.
After the dot-com bubble burst on March 11, 2000, several companies that Amazon had invested in went bankrupt, with Amazon's stock price itself sinking to record lows. Despite Amazon's survival, the company made very few investments for the next several years, only acquiring two companies between 2000 and 2004. The company returned to making multiple acquisitions per year in 2005, focusing on acquiring digital retailers and media websites. Starting in 2011, Amazon began shifting its focus to buying technology startups to develop and improve Amazon Echo and grow its Amazon Web Services division.
The Inflation Reduction Act (IRA) of 2022 introduced a 1% excise tax on share repurchases of over $1 million, of any US corporation trading on an established exchange. The tax applies if more than $1 million of stock is purchased over the course of the tax year."}},"@type": "Question","name": "Which US Corporation had the Largest Buyback of 2022?","acceptedAnswer": "@type": "Answer","text": "Apple (AAPL) at $21.7 Billion in stock buybacks in Q2 2022.","@type": "Question","name": "Do I Have to Sell my Shares During a Buyback?","acceptedAnswer": "@type": "Answer","text": "No, you are not required to sell your share back to the company."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsShare RepurchaseHow They WorkReasonsPros and ConsReal-World ExampleIs there a Tax on Stock BuyBacks?Which US Corporation had the Largest Buyback of 2022?Do I Have to Sell my Shares During a Buyback?The Bottom LineStock TradingStock Trading Strategy & EducationShare Repurchases: Why Do Companies Do Share Buybacks?ByCaroline BantonFull Bio LinkedIn Twitter Caroline Banton has 6+ years of experience as a freelance writer of business and finance articles. She also writes biographies for Story Terrace.Learn about our editorial policiesUpdated February 07, 2023Reviewed by 041b061a72