2013 is the year of the repurchase program.
So far this year, major repurchase programs have been announced by some of Wall Street’s largest companies. Forget the great rotation – retail investors will find it hard to keep up with the pace of repurchases by the world’s largest publicly-traded companies.
Here are three companies with aggressive repurchase plans.
The company has authorization to repurchase as much as 5.6% of its total shares outstanding, a move which would cost the company $11.2 billion in cash at current share prices. This follows along in International Business Machines Corp. (NYSE:IBM)’s long history of using share repurchases to boost earnings per share and enrich existing shareholders with a larger portion of the company’s future income.
International Business Machines Corp. (NYSE:IBM) has paid out more than $150 billion to shareholders in the form of dividends and repurchases since 2000. During that period, share count fell by more than one-third. International Business Machines Corp. (NYSE:IBM) expects to continue the pace of rapid share repurchases, planning to ask the board for a bigger authorization in the third quarter of 2013.
Repurchases have created substantial shareholder value for investors while attracting classic value investors like Warren Buffett, who holds a sizable stake in International Business Machines Corp. (NYSE:IBM) for Berkshire Hathaway.
The Home Depot, Inc. (NYSE:HD) posted extraordinary fourth quarter net income, with growth coming in at 32% year-over-year. While the company plans to continue its expansion by opening new stores, the business is mature, with more than 1,000 Home Depots serving customers around the United States.
That leads The Home Depot, Inc. (NYSE:HD)’s management to focus on alternative methods of value creation for shareholders. After impressive fourth quarter results, The Home Depot, Inc. (NYSE:HD) delivered with the announcement of a $17 billion repurchase program, which would take one-sixth of its existing equity off the market if The Home Depot, Inc. (NYSE:HD) acquires shares at the current price.
The Home Depot, Inc. (NYSE:HD)’s buying spree is one of the most impressive of recent repurchase authorizations. The company hopes to slash shares outstanding and use the full amount of its $17 billion authorization by the end of fiscal year 2015.
Merck & Co., Inc. (NYSE:MRK) posted a poor quarter for earnings, then topped it off with lower full-year 2013 net income guidance of $3.45 to $3.55 per share, below the lower range of its prior guidance at $3.60. Merck & Co., Inc. (NYSE:MRK)’s guidance falls short of analysts’ consensus expectations of $3.62 per share.