S&P 500 Q3 2014 Buybacks Increase 25% Over Q2

Share Count Reduction Continues as Companies Add a Tail Wind to EPS

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Dec 23, 2014, 09:30 ET

NEW YORK, Dec. 23, 2014 /PRNewswire/ -- S&P Dow Jones Indices announced today that preliminary results show that S&P 500® third quarter 2014 stock buybacks, or share repurchases, increased 25.0% to $145.2 billion up from the $116.2 billion spent on share repurchases during the second quarter of this year. The $145.2 billion Q3 spend represents a 13.3% increase from the $128.2 billion spent during the third quarter of 2013.

"Share count reductions continue to add a tailwind to EPS," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "While third quarter expenditures were up 25%, the number of companies reducing their share count declined 13%. Still, over half of the S&P 500 issues reduced their share count with 20% decreasing them enough to impact their year-over-year EPS by at least 4%."

According to S&P Dow Jones Indices, for the 12 months ending September 2014, S&P 500 issues increased their buyback expenditures by 23.5% to $550.1 billion over the $445.3 billion posted during the corresponding twelve month period in 2013. The twelve-month high mark was reached in fiscal year 2007, when companies spent $589.1 billion. The twelve-month recession low point was $137.6 billion, recorded in fiscal year 2009.

Silverblatt notes that the larger buyback expenditures were needed this quarter to offset issuance for shares used for employee options and M&A. For the third quarter of 2014, companies increased their overall spending on buybacks to compensate for the higher issuance as well as the 4% increase (in the third quarter) of the average daily stock price. The net change is lower share counts and higher EPS, but not a substantial growth in the number of issues executing a share count reduction.

S&P Dow Jones Indices' data show that fewer companies reduced their share count this quarter than last, with 257 doing so in Q3, down from 295 in Q2 and 276 in Q3 2014. Significant changes (generally considered 1% or greater for the quarter) continued to strongly favor reductions, but were down, as 101 issues reduced their share count by at least 1%. Share reduction change impacts of at least 4% (Q3 2014 over Q3 2013), which can be seen in EPS comparisons, were 99 in Q3 2014 down from the prior quarter's 116 but up from the Q3 2013's 56.

Silverblatt also notes that companies continue to increase their total shareholders' returns through regular cash dividends, as well as buybacks. Over the year ended September 2014, buyback and dividend expenditures combined reached a new record high of $892.7 billion, with buybacks representing 62.0% of the total.

"Q3 required more of a commitment by companies via buybacks to negate issuance and reduce share count," adds Silverblatt. "Q4 would appear to continue this trend, but might require more of an expenditure requirement to meet issuance, and even more if companies wish to add a stronger tail wind for their Q4 EPS."

"Share prices have been volatile for the period, but are still averaging 1.2% higher than Q3," adds Silverblatt. "At this point, given the cash reserves and pressure on boards to protect and enhance their EPS, we expect that Q4 will be an active quarter for buybacks resulting in a 20% year-over-year- gain."

On a sector basis, Information Technology increased its buyback dominance as it now represents 29.6% (up from last quarter's 26.3%) of all S&P 500 buybacks, as the sector increased its expenditure 40.4%. Apple led the S&P 500 with its $17 billion expenditure, which ranked second highest in index history – with Apple's Q1 2014 $18 billion purchase being number one.

All data in this press release should be sourced to: S&P Dow Jones Indices. Historical S&P 500 buyback data can be found at: www.spindices.com/indices/equity/sp-500.

S&P Dow Jones Indices
S&P 500, $ U.S. BILLIONS, preliminary values in bold
PERIOD	MARKET	OPERATING	AS REPORTED					DIVIDEND &	DIVIDENDS
	VALUE	EARNINGS	EARNINGS	DIVIDENDS	BUYBACKS	DIVIDEND	BUYBACK	BUYBACK	& BUYBACKS
	$ BILLIONS	$ BILLIONS	$ BILLIONS	$ BILLIONS	$ BILLIONS	YIELD	YIELD	YIELD	$ BILLION

9/30/2014 Prelim.	$17,519	$262.92	$244.00	$89.02	$145.19	1.96%	3.14%	5.10%	$234.22
6/30/2014	$17,404	$260.50	$240.96	$86.65	$116.17	1.91%	3.06%	4.98%	$202.82
3/31/2014	$16,700	$243.67	$221.82	$81.96	$159.28	1.93%	3.20%	5.14%	$241.24
12/31/2013	$16,495	$252.10	$236.31	$84.98	$129.41	1.89%	2.88%	4.77%	$214.40
9/30/2013	$14,960	$239.50	$219.13	$79.26	$128.16	2.05%	2.98%	5.03%	$207.42
6/30/2013	$14,310	$234.84	$221.56	$76.67	$118.05	2.07%	2.94%	5.02%	$194.72
3/31/2013	$13,979	$229.57	$215.76	$70.86	$99.97	2.06%	2.97%	5.02%	$170.82
12/31/2012	$12,742	$206.84	$184.50	$79.83	$99.15	2.20%	3.13%	5.33%	$178.98
9/30/2012	$12,881	$214.58	$189.64	$69.48	$103.72	2.07%	3.01%	5.08%	$173.20
6/30/2012	$12,303	$229.69	$195.27	$67.31	$111.75	2.08%	3.27%	5.35%	$179.05
3/31/2012	$12,730	$219.09	$208.15	$64.07	$84.29	1.95%	3.14%	5.09%	$148.37
12/31/2011	$11,385	$214.83	$186.85	$65.89	$87.59	2.11%	3.56%	5.67%	$153.47
09/30/2011	$10,303	$230.30	$206.08	$59.20	$118.41	2.22%	3.92%	6.14%	$177.61
6/30/2011	$12,021	$226.29	$202.44	$59.03	$109.24	1.84%	3.04%	4.88%	$168.27
3/31/2011	$12,068	$205.34	$195.15	$56.08	$89.84	1.76%	2.76%	4.52%	$145.91
12/31/2010	$11,430	$199.40	$187.67	$54.85	$86.36	1.80%	2.61%	4.42%	$141.21
09/30/2010	$10,336	$195.28	$176.80	$51.26	$79.56	1.94%	2.52%	4.45%	$130.81
06/30/2010	$9,323	$189.04	$178.00	$50.44	$77.64	2.10%	2.31%	4.41%	$128.08
03/31/2010	$10,560	$175.00	$157.85	$49.28	$55.26	1.83%	1.54%	3.36%	$104.54
12/31/2009	$9,928	$152.77	$135.14	$49.04	$47.82	1.97%	1.39%	3.36%	$96.86
09/30/2009	$9,337	$139.37	$130.37	$47.21	$34.85	2.24%	1.48%	3.71%	$82.06
06/30/2009	$8,045	$120.85	$118.22	$47.63	$24.20	2.77%	2.40%	5.17%	$71.83
03/31/2009	$6,928	$87.78	$65.29	$51.73	$30.78	3.43%	3.70%	7.13%	$82.51
12/31/2008	$7,852	-$0.78	-$202.11	$62.19	$48.12	3.15%	4.33%	7.48%	$110.31
09/30/2008	$10,181	$142.90	$86.16	$61.44	$89.71	2.48%	4.26%	6.73%	$151.15

S&P Dow Jones Indices
S&P 500 20 LARGEST Q3 2014 BUYBACKS, $ MILLIONS
Company	Ticker	Sector	Q3,'14	12 Mo Sep,'14	Indicated	SCR	SCR
			Buybacks	Buybacks	Dividend	Q3,'14/	Q3,'14/
			$ Mil	$ Mil	$ Mil	Q2,'14	Q3,'13
Apple	AAPL	Information Technology	$17,000	$32,910	$11,257	-1.32%	-6.16%
Monsanto	MON	Materials	$6,168	$1,431	$949	-4.64%	-4.95%
Intel	INTC	Information Technology	$4,182	$4,009	$4,456	-1.52%	-1.08%
Exxon Mobil	XOM	Energy	$3,002	$13,209	$11,771	-0.63%	-2.88%
Microsoft	MSFT	Information Technology	$2,888	$7,316	$10,217	0.07%	-0.98%
Merck	MRK	Health Care	$2,670	$3,824	$5,192	-1.29%	-1.66%
Caterpillar	CAT	Industrials	$2,500	$2,738	$1,758	-2.43%	-4.46%
Wells Fargo	WFC	Financials	$2,490	$7,497	$7,309	-0.76%	-1.32%
Johnson & Johnson	JNJ	Health Care	$2,415	$5,504	$7,897	-0.34%	-0.59%
Procter & Gamble	PG	Consumer Staples	$2,378	$6,005	$6,971	-0.13%	-1.24%
Home Depot	HD	Consumer Discretionary	$2,078	$7,700	$2,530	-1.40%	-5.86%
Oracle	ORCL	Information Technology	$2,000	$9,813	$2,138	-0.46%	-2.70%
International Business Machines	IBM	Information Technology	$1,700	$15,880	$4,389		-9.20%
Gilead Sciences	GILD	Health Care	$1,698	$2,150	$0	-1.68%	-3.27%
Time Warner	TWX	Consumer Discretionary	$1,605	$3,177	$1,086		-7.31%
American International Group	AIG	Financials	$1,554	$2,446	$713	-1.54%	-2.91%
JPMorgan Chase	JPM	Financials	$1,489	$2,800	$6,018	-0.62%	0.58%
Walt Disney Company	DIS	Consumer Discretionary	$1,440	$6,480	$1,974	-0.80%	-3.93%
Cisco Systems	CSCO	Information Technology	$1,430	$9,843	$3,875	-0.31%	-5.05%
Yahoo!	YHOO	Information Technology	$1,382	$3,085	$0	-0.69%	-3.26%
Top 20			$62,069	$147,817	$90,501
S&P 500			$145,193	$532,099	$378,840
Top 20% of S&P 500			42.75%	27.78%	23.89%
SCR - Share Count Reduction in average weighted diluted share count used for EPS
Gross values are not adjusted for float

S&P Dow Jones Indices
S&P 500 SECTOR BUYBACKS
SECTOR $ MILLIONS	Q3,'14	Q2,'14	Q3,'13	12MO SEP,'14	12 MO SEP,'13	5-YEARS

Consumer Discretionary	$21,327	$18,969	$22,962	$76,987	$67,078	$316,111
Consumer Staples	$9,970	$8,529	$11,033	$41,839	$43,761	$231,955
Energy	$8,810	$8,716	$11,981	$42,853	$37,141	$176,120
Financials	$20,441	$17,330	$15,748	$72,110	$53,460	$238,401
Healthcare	$13,930	$15,221	$15,789	$59,491	$59,047	$288,635
Industrials	$16,498	$12,662	$14,171	$67,414	$49,100	$201,927
Information Technology	$42,906	$30,569	$32,115	$157,185	$109,742	$501,398
Materials	$10,866	$3,772	$1,909	$27,070	$7,684	$51,678
Telecommunication Services	$286	$324	$2,302	$4,403	$17,034	$31,016
Utilities	$158	$79	$146	$702	$1,277	$9,613
TOTAL	$145,193	$116,171	$128,158	$550,053	$445,323	$2,046,854

SECTOR BUYBACK MAKEUP %	Q3,'14	Q2,'14	Q3,'13	12MO SEP,'14	12 MO SEP,'13	5-YEARS
Consumer Discretionary	14.69%	16.33%	17.92%	14.00%	15.06%	15.44%
Consumer Staples	6.87%	7.34%	8.61%	7.61%	9.83%	11.33%
Energy	6.07%	7.50%	9.35%	7.79%	8.34%	8.60%
Financials	14.08%	14.92%	12.29%	13.11%	12.00%	11.65%
Healthcare	9.59%	13.10%	12.32%	10.82%	13.26%	14.10%
Industrials	11.36%	10.90%	11.06%	12.26%	11.03%	9.87%
Information Technology	29.55%	26.31%	25.06%	28.58%	24.64%	24.50%
Materials	7.48%	3.25%	1.49%	4.92%	1.73%	2.52%
Telecommunication Services	0.20%	0.28%	1.80%	0.80%	3.83%	1.52%
Utilities	0.11%	0.07%	0.11%	0.13%	0.29%	0.47%
TOTAL	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%

S&P Dow Jones Indices
S&P 500 20 LARGEST QUARTERLY BUYBACKS, $ MILLIONS, as of Q3 2014
$ MILLIONS	QUARTER	COMPANY	SECTOR
$17,971	Q1 2014	Apple	Information Technology
$17,000	Q3 2014	Apple	Information Technology
$16,000	Q2 2013	Apple	Information Technology
$15,707	Q2 2007	International Business Machines	Information Technology
$12,852	Q2 2012	Johnson & Johnson	Healthcare
$12,183	Q3 2012	Johnson & Johnson	Healthcare
$10,723	Q3 2007	Home Depot	Consumer Discretionary
$9,859	Q4 2007	Transocean	Energy
$9,179	Q4 2006	Exxon Mobil	Energy
$9,465	Q1 2008	Exxon Mobil	Energy
$8,845	Q4 2008	Exxon Mobil	Energy
$8,761	Q2 2008	Exxon Mobil	Energy
$8,663	Q3 2008	Exxon Mobil	Energy
$8,463	Q3 2007	Exxon Mobil	Energy
$8,166	Q1 2014	International Business Machines	Information Technology
$8,000	Q3 2012	American International Group	Financials
$7,985	Q3 2006	Exxon Mobil	Energy
$7,938	Q4 2007	Exxon Mobil	Energy
$7,852	Q1 2009	Exxon Mobil	Energy
$7,788	Q1 2007	Exxon Mobil	Energy
$213,400		TOP 20

S&P Dow Jones Indices							Cash and equivalents (cash) are classified under current assets on the balance sheet, and represent the readily available discretionary liquid assets of a company. Cash is measured for the S&P Industrials (Old), which consist of the S&P 500 minus Financials, Utilities and Transportation issues since these issues maintain high cash reserves as part of their normal operating process [Note: The S&P Industrials (Old) date back for decades. When the GICS classifications were developed, one of the new sectors was the Industrials, so the former group is referred to as the S&P Industrials (Old)].
S&P 500 INDUSTRIAL (OLD) CASH AND EQUIVALENT LEVELS
DATE	CASH &	% HELD	% SHORT-TERM	CASH %	LTD % OF	CASH % OF
	EQUIVALENT	AS CASH	SECURITIES	OF LTD	MARKET	MARKET
	$ MILLIONS				VALUE	VALUE
9/30/2014 Prelim.	$1,246,063	58.01%	41.99%	48.91%	20.26%	9.91%
6/30/2014	$1,249,892	54.06%	45.94%	49.60%	17.22%	8.54%
3/31/2014	$1,233,070	58.63%	41.37%	49.49%	17.86%	8.84%
12/31/2013	$1,304,447	61.84%	38.16%	53.21%	17.68%	9.41%
9/30/2013	$1,245,790	60.36%	39.64%	55.46%	19.09%	10.59%
6/30/2013	$1,143,837	58.30%	41.70%	59.95%	16.02%	9.60%
3/31/2013	$1,093,516	60.14%	39.86%	58.76%	15.91%	9.35%
12/31/2012	$1,091,310	63.39%	36.61%	53.21%	18.94%	10.08%
9/30/2012	$1,030,442	64.20%	35.80%	58.93%	15.93%	9.39%
6/30/2012	$985,375	63.89%	36.11%	55.00%	17.26%	9.49%
3/31/2012	$1,013,187	65.98%	34.02%	50.96%	18.36%	9.36%
12/31/2011	$1,027,296	68.14%	31.86%	52.40%	20.39%	10.69%
9/30/2011	$998,581	64.66%	35.34%	52.56%	21.85%	11.48%
6/30/2011	$976,061	65.01%	34.99%	59.05%	17.32%	10.23%
3/31/2011	$963,314	67.28%	32.72%	52.62%	18.39%	9.68%
12/31/2010	$940,149	65.48%	34.52%	51.68%	20.24%	10.46%
09/30/2010	$902,389	65.51%	33.55%	48.79%	20.19%	9.85%

About S&P Dow Jones Indices
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