Apple, Wal-Mart And Other Companies With Monster Share Buyback (AAPL, WMT)
Below, we take a quick look at how these stocks have fared and what analysts expect from them.
When it comes to returning capital to shareholders, stock buybacks are a common alternative to dividends. Reducing the number of shares held by the public, particularly when a company's share price is undervalued, typically increases the earnings per share.
Some other companies with share buyback programs of greater than $1 billion include Citigroup (NYSE: C), Halliburton (NYSE: HAL), Juniper Networks (NYSE: JNPR), Priceline.com (NASDAQ: PCLN) and Time Warner Cable (NYSE: TWC).
Once considered nearly infallible, the iPhone and iPad maker has struggled of late, but it is expected to buy back up to $60 billion worth of its shares by the end of 2015. This Cupertino, California-based company sports a market capitalization near $424 billion. Its dividend yield is about 2.6 percent.
The price-to-earnings (P/E) ratio is less than the industry average, and the long-term earnings per share (EPS) growth forecast is more than 18 percent. The operating margin is better than the industry average. Also, short interest is less than three percent of the float.
The consensus recommendation of the analysts surveyed by Thomson/First Call who follow this stock remains to buy Apple shares. The mean price target, or where analysts expect the share price to go, is more than 12 percent higher than the current share price. But that target is much less than the 52-week high.
Shares of Apple are down more than 15 percent year-to-date, despite increasing more than 10 percent in the past month. Over the past six months, the stock has underperformed the broader markets, as well the likes of Google (NASDAQ: GOOG) and Hewlett-Packard (NYSE: HPQ).
This New York City-based mass media company currently has a $6 billion share buyback plan. It also has a dividend yield of about 0.9 percent and a market cap near $33 billion. The long-term EPS growth forecast is more than 14 percent. The return on equity is more than 17 percent, and the operating margin is higher than the industry average.
Eight of the 30 analysts polled rate the stock at Strong Buy, and another 15 also recommend buying shares. But there is only one analyst price target on record, and that one indicates more than nine percent potential upside. That target would be a new multiyear high.
The share price reached the current multiyear high last week, after rising almost 40 percent since the beginning of the year. Over the past six months, this stock has outperformed competitor Walt Disney (NYSE: DIS) and the broader markets.
Back in May, this global pharmaceutical giant announced a $5 billion share repurchase program. The company's market cap is almost $147 billion. Its dividend yield is about 3.5 percent. The P/E ratio is higher than the industry average, but so is the operating margin. Short interest is less than three percent of the company's float.
Ten of the 18 surveyed analysts recommend buying shares, with four of them rating the stock at Strong Buy. The analysts believe shares have a little head room, as their price target is more than five percent higher than the current share price. That target would be a multiyear high, though.
The share price is up more than 17 percent since the beginning of the year. The stock has outperformed competitors GlaxoSmithKline (NYSE: GSK), Novartis (NYSE: NVS) and Pfizer (NYSE: PFE), as well as the S&P 500, over the past six months.
The world's largest retailer announced a $15 billion stock buyback plan at its shareholder meeting in June. Wal-Mart has a more than $258 billion market cap and a dividend yield near 2.4 percent. The long-term EPS growth forecast is less than 10 percent. The return on equity is more than 23 percent. Short interest is less than two percent of the float.
Out of 27 surveyed analysts, 13 recommend buying shares and none rates the stock at Underperform or Sell. The consensus price target is less than five percent higher than the current share price, but that target would be a new multiyear high.
The share price has risen more than four percent in the past month and is now about 13 percent higher year-to-date. Over the past six months, the stock has underperformed other big-box stores Best Buy (NYSE: BBY), Home Depot (NYSE: HD) and Target (NYSE: TGT).
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