S&P Indices: S&P 500 Stock Buybacks Decrease for First Time Since Q2 2009

NEW YORK, March 28, 2012 /PRNewswire/ -- S&P Indices announced today that preliminary results show that S&P 500 stock buybacks decreased 22.8% to $91.5 billion during the fourth quarter of 2011, the first quarterly decline since the second quarter of 2009. For calendar year 2011, S&P 500 issues increased their buyback expenditures by 36.9% to $409.0 billion from the $298.8 billion posted in 2010.

"Companies appear to have finally gotten it right," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "With average share prices declining 14.3% during the third quarter of 2011, companies poured $118 billion into stock buybacks (the most since the heydays of 2007), buying back shares at reduced prices. With depressed prices, companies were able to scoop up additional shares, which reduced the number needed for year-end employee options. In the fourth quarter, with share prices increasing an average of 11.2%, they pulled back."

On a sector basis, Silverblatt notes that Health Care and Energy were the lone sectors to increase their buyback activity during the fourth quarter, with a 7.5% and 2.9% respective increase. "At this point I would not read a pullback into the quarter; however, corporate willingness to live off their prior quarter's gains is not a strong vote of confidence."

Exxon Mobil continues to be the poster child for share repurchases spending $5.4 billion on buybacks during the fourth quarter, slightly down from its $5.5 billion share repurchase level for the third quarter. Trailing Exxon during the fourth quarter was Amgen with $5.3 billion in buybacks, Intel with $4.2 billion, International Business Machines with $3.6 billion, and Pfizer with $3.2 billion.

For the first quarter of 2012, Silverblatt expects companies to retake the $100 billion level; however, as share prices have increased, the net result should be flat to fewer shares repurchased. "The current bull market run has increased prices 25% over the last two quarters. As a result, more options are now in the money, costing companies more to protect their earnings-per-share."

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

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SOURCE S&P Indices