Thursday, June 27, 2019

Calcbench just dropped a new report about firms’ spending on share repurchase programs, perhaps confirming what you already suspected — yep, corporations are spending a lot of money buying back shares.

We examined seven years’ worth of data, charting how much all U.S.-listed firms spent on share repurchases from the start of 2012 through first-quarter 2019. The full report is available for (free) download, and we’ll recap a few highlights here.

First, firms have been spending huge sums on buybacks: $4.95 trillion over the 29 quarters we examined, and on a per quarter basis, that spending has increased over time. In 2012, for example, quarterly totals fell somewhere from $100 billion to $150 billion. By 2018, quarterly totals were north of $200 billion. See Figure 1, below.



Second, a small number of large firms account for a big part of all money spent on share repurchases. For example, of the more than $220 billion spent on share repurchases in Q1 2019, five firms (Apple, Oracle, Pfizer, Bank of America, and Cisco Systems) accounted for 25 percent of all money spent.

Third, buyback spending soared starting in fourth-quarter 2017, even as spending on R&D and capital equipment stayed relatively flat. See Figure 2, below.



Yes, capex spending did rise in 2018, and R&D fluctuated a bit — but neither of those trends are anywhere near the climb that buyback spending saw starting at the end of 2017. That’s when Congress enacted its steep cut in corporate tax rates. So those who say Corporate America then spent all that newfound money on share repurchase programs have data on their side.

The report also…

  • Lists the companies that spent the most on buybacks (Apple topping the list, of course);
  • Tracks “share buyback yield,” which essentially measures how much of a firm’s market cap is acquired in a repurchase;
  • Compares median and mean dollars spent on repurchases;
  • Compares repurchases versus dividends as ways to funnel value to shareholders.

Be sure to visit our Research page to see prior years’ share repurchase analyses, going back to 2014.

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