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Buyback Scorecard A Tale of Two Stock Buybacks The 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 December 31, 2011 through December 31, 2013, 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.
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The Best and Worst Corporate Stock Buyback Programs | |||||||||
| Best | |||||||||
| Company | Industry | Market Capitalization | $ Total Buyback | $ Total Buyback / Market Cap | Buyback Strategy | Buyback Effectiveness | Buyback ROI | ||
| 1 | The Boeing Co. | Capital Goods | 102,566 | 1,801 | 1.8 | 42.4 | 51.3 | 115.6 | |
| 2 | Gilead Sciences | Pharmaceuticals, Biotechnology and Life Sciences | 115,155 | 1,249 | 1.1 | 86.8 | 6.1 | 98.2 | |
| 3 | Yahoo! | Software and Services | 41,024 | 5,512 | 13.4 | 51.3 | 29.8 | 96.5 | |
| 4 | GameStop Corp. | Retailing | 5,705 | 614 | 10.8 | 50.5 | 26.0 | 89.5 | |
| 5 | Celgene Corp. | Pharmaceuticals, Biotechnology and Life Sciences | 69,627 | 4,808 | 6.9 | 56.8 | 15.1 | 80.4 | |
| 6 | Boston Scientific Corp. | Healthcare Equipment and Services | 16,049 | 1,100 | 6.9 | 46.3 | 17.4 | 71.7 | |
| 7 | Western Digital Corp. | Technology Hardware and Equipment | 19,845 | 1,746 | 8.8 | 63.8 | 4.1 | 70.5 | |
| 8 | Lincoln National Corp. | Insurance | 13,542 | 942 | 7.0 | 62.3 | 4.4 | 69.5 | |
| 9 | Southwest Airlines Co. | Transportation | 13,126 | 940 | 7.2 | 45.7 | 14.4 | 66.7 | |
| 10 | Ameriprise Financial | Diversified Financials | 22,382 | 2,964 | 13.2 | 55.5 | 6.7 | 66.0 | |
| Worst | |||||||||
| Company | Industry | Market Capitalization | $ Total Buyback | $ Total Buyback / Market Cap | Buyback Strategy | Buyback Effectiveness | Buyback ROI | ||
| 1 | Teradata Corp. | Software and Services | 7,433 | 659 | 8.9 | -8.3 | -24.3 | -30.5 | |
| 2 | Intuitive Surgical | Healthcare Equipment and Services | 14,620 | 1,348 | 9.2 | -5.4 | -23.4 | -27.5 | |
| 3 | Edwards Lifesciences Corp. | Healthcare Equipment and Services | 7,195 | 850 | 11.8 | -1.3 | -15.5 | -16.6 | |
| 4 | CenturyLink | Telecommunication Services | 18,826 | 1,623 | 8.6 | 1.6 | -16.2 | -14.9 | |
| 5 | Citrix Systems | Software and Services | 11,790 | 657 | 5.6 | -5.2 | -9.8 | -14.5 | |
| 6 | F5 Networks | Technology Hardware and Equipment | 7,052 | 550 | 7.8 | -8.4 | -3.9 | -12.0 | |
| 7 | Cameron International Corp. | Energy | 14,160 | 1,553 | 11.0 | 8.1 | -16.8 | -10.0 | |
| 8 | Red HAt | Software and Services | 10,620 | 436 | 4.1 | -0.6 | -7.8 | -8.3 | |
| 9 | Coach | Consumer Durables and Apparel | 15,742 | 1,091 | 6.9 | -4.0 | -4.0 | -7.8 | |
| 10 | International Business Machines Corp. | Software and Services | 203,674 | 25,854 | 12.7 | 0.6 | -7.5 | -6.9 | |
| Source: Fortuna Advisors Analysis using data from the Capital IQ database. Financial Data from December 2011 to December 2013. Includes the 486 members of the current S&P 500 that were public for the full period. Market Capitalization as of: 12/31/2013. Companies Included here if $ Total Buyback / Market Capitalization is greater than 4% or if $ Total Buyback is greater than $1 Billion. | |||||||||