Share buybacks back in vogue
Companies are taking advantage of low stock prices and cheap financing to buy back shares.
And why not? As one analyst notes, shares are cheap and financing is cheap. After sitting on piles of cash as the recession hit, companies are finally relenting and spending money on share repurchases. The moves show that companies are generally feeling better about where the economy is headed.
Companies in the U.S. have repurchased about $55 billion in shares since June, Bloomberg reports. That brings this year's total to about $260 billion so far, up from $125 billion in all of 2009.
"Levering a balance sheet is a good idea if you want to expand your company," one asset manager told Bloomberg. "You don’t do that unless you feel secure about 2011."
Here are some of the biggest companies buying back shares:
Microsoft (MSFT): The company is reportedly selling debt to buy back shares and fund dividends, Bloomberg reported, and could sell as much as $6 billion in debt without risking its credit rating. Note: Microsoft publishes MSN Money.
PepsiCo (PEP): The company has sold $4.25 billion in bonds this year, Bloomberg calculates. It had postponed share buybacks while in negotiations to buy out two bottlers, but now says buybacks may total $4.4 billion this year.
HP (HPQ): The company had already green-lit $4.9 billion in share repurchases, but its board recently added $10 billion to the plan.
AutoZone (AZO): Share buybacks over the last few quarters have trimmed the number of shares outstanding by 11%, The Wall Street Journal reports. That certainly helps the auto parts giant's earnings per share, which rose to $5.66 for the recent quarter from $4.43 a year earlier.
Tyco International (TYC): The board recently approved the repurchase of as much as $1 billion in stock.
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These hot movers could rise by double digits in coming months.
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