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International Business Machines Corp. (IBM), Intel Corporation (INTC), The Coca-Cola Company (KO): Are These Dow (.DJI) Companies Buying Back Wisely?

Unlike the other 4 companies, the free cash flow for Exxon Mobil Corporation (NYSE:XOM), the largest publicly traded international oil and gas company in the world, has been declining since late 2011. However, Exxon Mobil Corporation (NYSE:XOM) had maintained its share repurchase level since then. Exxon Mobil Corporation (NYSE:XOM)’s share price had only gained 2.58% in the past 5 years, while the Dow Jones index had increased 19.37%. Exxon Mobil Corporation (NYSE:XOM) management continues to face a tough task of increasing shareholder value with declining free cash flow.

Take Away

This article only gives a quick look at these 5 companies’ buyback activities in relation to their share price and free cash flow in the past 5 years. Investors need to do further due diligence and research to identify the full picture of management’s efficiency. With the exception of Exxon Mobil Corporation (NYSE:XOM), all of these companies did not increase their share buyback plans significantly, despite their strong free cash flow. What does this imply? My best guess is that the management of these 4 companies do not perceive their companies to be undervalued, or management is preserving capital for better use. For Intel Corporation (NASDAQ:INTC), it makes sense to preserve capital. For the rest, time will tell if management made the right call by not boosting their buyback plans now.

The article Are These Dow Companies Buying Back Wisely? originally appeared on

Nick Chiu has a position in Intel. The Motley Fool recommends Coca-Cola, Intel, and Procter & Gamble. The Motley Fool owns shares of Intel and International Business Machines. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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