Investing 101: Which Companies are Buying Back Their Own Stock?

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(List compiled by Becca Lipman. Data sourced from Finviz.)

Lowe's Corporation, the second largest US home improvement chain, recently announced its intentions to set aside $5 billion to buy back its shares over the next 2-3 years. Lowe's isn't alone. Home Depot, their chief competitor, announced a $1 Billion share buyback in late March.

Buybacks, or share repurchases, are when a company starts to purchase its own stock, taking it off the market. Doing so lessens the number of outstanding shares held by the public. The buying pressure tends to increase the value of the shares, as does the fact that there are now fewer shares outstanding.


Another side effect: Given the decreased number of shares, earnings per share will increase if profits remain unchanged.

Lowe's stock has fallen 23% this year and buybacks are expected tolessen the hit. $5 billion in buybacks currently represents about a fifth of the market share. If Lowe's shares are currently undervalued, a rally in company profits will mean strong return on investments for the firm.

Lastly, buying up stocks reduces the cash lying around the company. Having cash tied up in equities can look more attractive on a company's balance sheet and make it less attractive of a takeover target. (Free cash transfers to the acquiring company. This essentially lowers the actual cost of acquisition.)

It should be noted that companies are no better than the average investors at repurchasing their own stocks with the "buy low, sell high" mentality.

Interested in analyzing the buyback scene?

We list below some of the big companies that recently announced buybacks. Do you think there are any undervalued names among them?

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1. AECOM Technology Corporation (ACM): Technical Services Industry. Market cap of $2.27B. Current price at $18.98. ACM recently set aside $200 million for share buybacks. The stock is currently stuck in a downtrend, trading -12.41% below its SMA20, -23.69% below its SMA50, and -29.7% below its SMA200. The stock has performed poorly over the last month, losing 28.4%.

2. Cognizant Technology Solutions Corp. (CTSH): Business Software & Services Industry. Market cap of $17.15B. Current price at $56.47. CTSH recently set aside $300 million for share buybacks. The stock is currently stuck in a downtrend, trading -14.53% below its SMA20, -19.31% below its SMA50, and -22.91% below its SMA200. It's been a rough couple of days for the stock, losing 11.67% over the last week.

3. Corrections Corporation of America (CXW): Management Services Industry. Market cap of $2.19B. Current price at $20.42. CXW recently set aside $150 million for share buybacks. The stock has lost 2.81% over the last year.

4. Forest Laboratories Inc. (FRX): Drug Manufacturers Industry. Market cap of $9.0B. Current price at $32.79. FRX recently set aside $350 million for share buybacks. The stock has performed poorly over the last month, losing 14.9%.

5. Henry Schein Inc. (HSIC): Medical Equipment Wholesale Industry. Market cap of $5.62B. Current price at $60.86. HSIC recently set aside $200 million for share buybacks. The stock is currently stuck in a downtrend, trading -5.23% below its SMA20, -11.48% below its SMA50, and -8.84% below its SMA200. It's been a rough couple of days for the stock, losing 5.14% over the last week.

6. Marsh & McLennan Companies, Inc. (MMC): Insurance Brokers Industry. Market cap of $14.95B. Current price at $27.6. MMC recently set aside $500 million for share buybacks. The stock has gained 21.32% over the last year.

7. Maxim Integrated Products Inc. (MXIM): Semiconductor Line Industry. Market cap of $6.44B. Current price at $21.86. MYGN recently set aside $200 million for share buybacks. Might be undervalued at current levels, with a PEG ratio at 0.78, and P/FCF ratio at 14.75. The stock has gained 37.23% over the last year.

8. Myriad Genetics Inc. (MYGN): Research Services Industry. Market cap of $1.58B. Current price at $18.6. MZIM recently set aside $750 million for share buybacks. The stock is a short squeeze candidate, with a short float at 6.51% (equivalent to 5.41 days of average volume). The stock is currently stuck in a downtrend, trading -6.27% below its SMA20, -15.04% below its SMA50, and -13.22% below its SMA200. The stock has performed poorly over the last month, losing 20.27%.

9. Riverbed Technology, Inc. (RVBD): Networking & Communication Devices Industry. Market cap of $3.17B. Current price at $20.37. RVBD recently set aside $150 million for share buybacks. The stock is currently stuck in a downtrend, trading -22.32% below its SMA20, -37.2% below its SMA50, and -42.27% below its SMA200. It's been a rough couple of days for the stock, losing 22.04% over the last week.

10. Westlake Chemical Corp. (WLK): Specialty Chemicals Industry. Market cap of $2.54B. Current price at $38.2. WLK recently set aside $100 million for share buybacks. The stock is a short squeeze candidate, with a short float at 15.16% (equivalent to 5.14 days of average volume). The stock is currently stuck in a downtrend, trading -14.61% below its SMA20, -22.06% below its SMA50, and -20.86% below its SMA200. It's been a rough couple of days for the stock, losing 12.02% over the last week.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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