| Buyback Scorecard U.S. Share Buybacks Rebound but Face Sharp CriticismThe S&P 500 as Stock Repurchasers Industry Comparisons |
The table below shows the 10 most and least effective stock buyback programs among the companies in the S&P 500 that bought back at least 4 percent or $1 billion of their shares from September 31, 2012 through September 31, 2014, according to their return on investment. As calculated by Fortuna Advisors, a New York City-based consultancy that compiled the data for Institutional Investor, buyback ROI measures the overall rate of return of these companies’ buybacks, based on the internal rate of return of the cash flows associated with them. Buyback strategy tracks the performance of the underlying stock in terms of annualized total shareholder return. Once Fortuna determines buyback ROI and buyback strategy, buyback effectiveness can then be calculated as simply the difference between the two, determined as compounded return.
| The Best and Worst Corporate Stock Buyback Programs | |||||||||
| Best | |||||||||
| Company | Industry | Market Cap ($ Millions) | Total Buyback (S Millions) | $ Total Buyback as % Market Cap | Buyback Strategy | Buyback Effectiveness | Buyback ROI | ||
| 1 | Southwest Airlines Co. | Transportation | 23,137 | 1,370 | 5.9 | 84.7 | 8.0 | 99.5 | |
| 2 | Keurig Green Mountain | Food, Beverage and Tobacco | 21,136 | 1,241 | 5.9 | 130.7 | -15.9 | 94.1 | |
| 3 | Gilead Sciences | Pharmaceuticals, Biotechnology and Life Sciences | 160,917 | 4,131 | 2.6 | 84.8 | -3.1 | 79.0 | |
| 4 | United Rentals | Capital Goods | 10,655 | 517 | 4.9 | 84.3 | -3.0 | 78.8 | |
| 5 | LyondellBasell Industries | Materials | 55,670 | 3,449 | 6.2 | 61.8 | 1.5 | 64.2 | |
| 6 | SanDisk Corp. | Technology Hardware and Equipment | 21,963 | 2,466 | 11.2 | 55.6 | 5.4 | 64.1 | |
| 7 | Western Digital Corp. | Technology Hardware and Equipment | 22,735 | 1,663 | 7.3 | 62.5 | 0.6 | 63.6 | |
| 8 | Hewlett-Packard Co. | Technology Hardware and Equipment | 66,197 | 4,260 | 6.4 | 42.8 | 11.2 | 58.8 | |
| 9 | Marriott International | Consumer Services | 20,311 | 2,049 | 10.1 | 35.5 | 12.1 | 51.9 | |
| 10 | McKesson Corp. | Healthcare Equipment and Services | 45,085 | 1,396 | 3.1 | 47.5 | 2.7 | 51.5 | |
| Worst | |||||||||
| Company | Industry | Market Cap ($ Millions) | Total Buyback (S Millions) | $ Total Buyback as % Market Cap | Buyback Strategy | Buyback Effectiveness | Buyback ROI | ||
| 1 | Coach | Consumer Durables and Apparel | 9,811 | 750 | 7.6 | -18.8 | -15.6 | -31.4 | |
| 2 | Whole Foods Market | Food and Staples Retailing | 13,767 | 703 | 5.1 | -8.5 | -24.7 | -31.1 | |
| 3 | Teradata Corp. | Software and Services | 6,498 | 902 | 13.9 | -23.0 | 8.0 | -16.8 | |
| 4 | Mattel | Consumer Durables and Apparel | 10,355 | 649 | 6.3 | 4.6 | -17.8 | -14.0 | |
| 5 | Fossil Group | Consumer Durables and Apparel | 4,968 | 969 | 19.5 | 12.2 | -17.6 | -7.5 | |
| 6 | Staples | Retailing | 7,795 | 508 | 6.5 | 2.0 | -7.7 | -5.9 | |
| 7 | Bed Bath & Beyond | Retailing | 13,295 | 3,248 | 24.4 | -1.1 | -4.2 | -5.2 | |
| 8 | Xilinx | Semiconductors and Semiconductor Equipment | 11,370 | 570 | 5.0 | 17.3 | -18.9 | -4.8 | |
| 9 | Target Corp. | Retailing | 39,721 | 2,106 | 5.3 | 0.9 | -3.6 | -2.7 | |
| 10 | The Mosaic Co. | Materials | 16,638 | 2,508 | 15.1 | -8.3 | 6.3 | -2.5 | |
| Source: Fortuna Advisors Analysis using data from the Capital IQ database. Financial Data from September 2012 to September 2014. Includes the 491 members of the current S&P 500 that were public for the full period. Market Capitalization as of: 09/30/2014. Companies included here if $ Total Buyback / Market Capitalization is greater than 4% or if $ Total Buyback is greater than $1 billion. | |||||||||