S&P 500 Stock Buybacks Increase for Ninth Consecutive Quarter; Q3 2011 Buybacks Up 48.8% Over Q3 2010

NEW YORK, Dec. 21, 2011 /PRNewswire/ -- S&P Indices announced today that preliminary results show that S&P 500 stock buybacks increased 8.4% to $118.4 billion during the third quarter of 2011, up from the $109.2 billion registered during the second quarter of 2011 and up 48.8% from the $79.6 billion posted in the third quarter of 2010.

"Companies appear to have taken the initial steps towards share count reduction with Q4 having the potential for impact in the earnings-per-share comparisons," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "While quarter-over-quarter buybacks appear mild at an 8.4% growth rate, share prices averaged 7.1% lower in the third quarter, permitting companies to buy back more shares pushing their EPS upward."

On a sector basis, Silverblatt notes that Information Technology continues to dominate the buyback market; however, their dominance has been reduced. For the third quarter, Information Technology issues accounted for 19.9% of all buybacks, down from 22.2% in the second quarter.

The Consumer Staples sector saw a significant increase in share repurchases. Consumer Staples companies spent $14.7 billion for the quarter, up from the $11.5 billion expenditure in the first quarter. The sector is also the largest contributor to cash dividends, accounting for 15.6% of all dividends.

Exxon Mobil continues to be the poster child for share repurchases, spending $5.5 billion on buybacks during the third quarter matching their second quartershare repurchase level. Trailing Exxon is JP Morgan Chase with $4.4 in share repurchases, Intel with $4.0 billion, International Business Machines with $3.4 billion, and ConocoPhillips with $3.2 billion.

For the fourth quarter of 2011, Silverblatt expects companies to achieve the $120 billion plus buyback level, and with prices averaging slightly lower than the third quarter, buying back more shares. "We need to start paying attention again to the growth variance in net income and EPS.  The trend is growing in share count reduction, which brings increased earnings per share with it."

Historical S&P 500 buyback data can be found at: www.marketattributes.standardandpoors.com.

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SOURCE S&P Indices