Monday, May 20, 2019
Research Paper: Capex Spending

Thursday, May 16, 2019
Psst: Got Any Weed?

Wednesday, May 15, 2019
Open Letter: SEC Proposed Rule for BDCs

Friday, May 10, 2019
General Motors and Workhorse

Monday, May 6, 2019
How to Find Earnings Release Data

Tuesday, April 23, 2019
Following Restructuring Costs Over Time

Monday, April 22, 2019
Capex Spending: More Than You Might Think

Saturday, April 13, 2019
When AWS Takes Over the World

Thursday, April 11, 2019
Data Trends in Focus: Restructuring Costs

Sunday, April 7, 2019
How One Customer Crushed It With Calcbench

Thursday, April 4, 2019
TJX Shows Complexity of Leasing Costs Reporting

Tuesday, April 2, 2019
CEO Pay Ratios: Some 2018 Thoughts

Wednesday, March 27, 2019
Corporate Spending: Where It Goes, 2017 vs. 2018

Monday, March 25, 2019
Health Insurers: A Bit Winded?

Friday, March 22, 2019
Our New Master Class Video

Thursday, March 21, 2019
Tech Data’s Goodwill Adjustment

Tuesday, March 19, 2019
There’s Taxes, and There’s Taxes

Saturday, March 16, 2019
Adventures in Tax Cuts and Net Income

Monday, March 11, 2019
Big Moves in Goodwill, Intangible Value

Friday, March 8, 2019
CVS, Goodwill, and Enterprise Value

Archive  |  Search:

We tend to be cynical people here at Calcbench, so one issue we will watch closely in 2018 is the amount of money companies spend repurchasing shares.

After all, one promise made last year during negotiations over tax reform was that if Uncle Sam did cut corporate tax rates and flood company coffers with cash, the money would go to hiring more people, buying new equipment, investing in more R&D — not on repurchasing shares, which foremost rewards insiders loaded up on equity-based compensation.

Well, tax reform became law. So how will companies use all that extra cash, now that they actually have it?

So far in 2018, we have only anecdotal evidence of how companies will spend the money. Some have given bonuses (Apple, Comcast, Disney, Waste Management, Southwest). Others have handed out raises (Walmart, Starbucks, JP Morgan, Wells Fargo). And a few have indeed said they will spend it on share repurchase programs: Anthem, for example, announced that it would devote half of its tax reform surplus to buybacks.

We can, however, start to get a good glimpse of how much money Corporate America spent on share buybacks in 2017.

As of Feb. 21, 335 of the S&P 500 have filed annual reports for 2017. That group spent $246.9 billion on repurchase of common shares in 2017 — less than they spent in 2016 or 2015, although the average amount spent per filer did increase. (In other words, some filers within the group cut back on share repurchase spending sharply, pushing the total down but the average per filer up.)

Broadly speaking, one would expect companies to spend less on share repurchase programs in times of rising stock markets, such as the market in most of 2017. As the market rises, shares become more expensive. Companies will either buy fewer shares for the same amount of money (because the price per share is rising); or they might suspend share programs until the price falls.

That said, drawing general conclusions about share buybacks is risky. Some sectors might be booming, prompting companies to retreat from buying expensive stock; while others are languishing, prompting confident CEOs to scoop up more stock while it’s cheap. Buybacks happen most often when a company believes its shares are undervalued. They also happen when the company isn’t sure how else to invest the money.

A safer analysis is to analyze those companies that you want to follow specifically. Look at the money they’re spending on buybacks, and what they disclose in the footnotes and earnings releases about why they are buying back stock.

As always, Calcbench subscribers can do that using our Interactive Disclosure tool and by setting email alerts to let you know when a new filing has arrived. And here at central command, we also track share repurchases and report overall activity every few months; be sure to visit our Research Page for older reports, and new ones will always be mentioned here.

FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.