Colossal Buybacks Trending Now: MO, IBM, AMGN, SNDK
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Traders have become skeptical of the outlook for the future growth of corporate profits, but this sentiment has not stopped a number of companies from announcing huge stock buyback initiatives. The moves serve as a vote of confidence to investors and demonstrate the overall financial strength of the organizations engaged in these strategies. Whether the trend will gather momentum or not remains to be seen. In the meantime, here are four companies that are plowing their cash into massive share buyback programs.
Lighting it Up
Last week, the tobacco giant Altria (NYSE: MO) announced a $1 billion share repurchase program in conjunction with the release of its Q3 earnings. The company posted respectable results as it benefitted from healthy operating margins and was able to reaffirm its full year earnings forecast.
Altria has a strong track record of returning its cash to shareholders in the form of stock buybacks and dividend payments. The company has already completed its previously announced $1 billion share repurchase program for 2011 and recently upped its quarterly dividend payment by 7.9%. MO shares have appreciated 11.9% so far this year.
Another blue chip name that has been having a big year and is also in the process of buying back a large amount of shares is International Business Machines (NYSE: IBM). On Tuesday of last week, the company authorized an additional $7 billion worth of buybacks. Since 2003, IBM has returned more than $100 billion to shareholders via share repurchases and dividends. Shares of IBM have rallied 25.8% year-to-date.
Innovators
The biotechnology company Amgen (Nasdaq: AMGN) was able to notch slight gains for both its top line and bottom line results in Q3. This positive trend encouraged the company's board of directors to increase Amgen's stock repurchase authorization to $10 billion. The company was also able to up its full year revenue and earnings forecasts.
Amgen has been benefitting from higher average net selling prices for Neulasta, Neupogen and Enbrel. The company has also reached an agreement in principle to settle federal investigations into its sales and marketing practices. Shares of AMGN are up 1.3% on the year.
The flash memory manufacturer SanDisk (Nasdaq: SNDK) announced late last week that is board of directors had authorized the repurchase of up to $500 million worth of the company’s common stock. SNDK shares are down 2.0% year-to-date.
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