A Few Rich Firms Are Fueling Record US Buybacks

There has been $261 billion in commitments so far this year — though much of it is spread across just five companies, JPMorgan says.
 A Few Rich Firms Are Fueling Record US Buybacks
 A Few Rich Firms Are Fueling Record US Buybacks

US buyback announcements are running at a record pace this year, though more than two-thirds of the $261 billion in commitments are spread across only five companies, according to JPMorgan Chase & Co. strategists.

Chevron Corp.’s $75 billion leads the way, followed by Meta Platforms Inc. with $40 billion, Goldman Sachs Group Inc. with $30 billion, and Booking Holdings Inc. and Salesforce Inc. with $20 billion each, a team led by Dubravko Lakos-Bujas wrote in a note.

While announcements of buybacks are scaling new peaks so far this year, execution of them has been falling. According to the strategists, stock repurchases were down 20% in the fourth quarter, with the pace decelerating since the first quarter of last year.

Buybacks have been a key source of share demand in the US over the past decade. But given current uncertainty over economic growth, companies may seek to preserve cash, while repurchases have also become a target for tax increases by the Biden administration.

Share buyback announcements by S&P 500 companies over the last 12 months have totaled $853 billion, compared with a peak of about $1 trillion in May 2019, the strategists said.

Meta, Big Oil Lead $160 Billion Buyback Revival: Earnings Watch

Other highlights from the note include:

  • Fourth-quarter earnings season in the US wasn’t as bad as feared, but confirmed emerging cracks within corporate fundamentals
  • 64% of S&P 500 companies beat estimates in the period, less than the average of 70% for past fourth-quarters
  • Earnings per share revisions continue to fall, with 2023 EPS revised down by $8 year-to-date to $222
  • The strategists see earnings expectations as too high heading into the second half, with expectations of higher profit margins at odds with sticky labor costs, rising cost of capital pressures and risk of demand slowing

--With assistance from .

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