Stock buybacks, or share repurchase programs, are commonly executed by companies to boost shareholder value.
A stock buyback occurs when a company purchases outstanding shares of its stock. In its simplest form, buybacks represent companies essentially re-investing in themselves.
And as of late, several companies – Meta Platforms META, American Eagle Outfitters AEO, and HCA Healthcare HCA – have unveiled new repurchase programs. Let’s take a closer look at each.
Meta Platforms
Meta’s quarterly results stole the show, with shares popping post-earnings. The technology titan posted a 10% beat relative to the Zacks Consensus EPS Estimate and reported sales 3% ahead of expectations, reflecting its fifth consecutive double-beat.
Up a remarkable 150% over the last year, better-than-expected results have driven performance.
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Meta authorized an additional $50 billion in share buybacks and unveiled its first-ever dividend, helping to explain the strong reaction post-earnings. The stock is currently a Zacks Rank #2 (Buy), with earnings expectations creeping higher across the board.
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The company’s growth profile remains solid, with expectations for its current year (FY24) suggesting 20% earnings growth on 13% higher sales. Improved profitability has been a major tailwind for the tech giant, with Q4 costs and expenses falling 8% year-over-year.
American Eagle Outfitters
American Eagle Outfitters is a specialty retailer of casual apparel, accessories, outerwear, and footwear for men and women. The company authorized a 30 million share buyback, replacing its previous authorization.
Like META, analysts have taken a bullish stance on the company’s outlook, landing the stock into a favorable Zacks Rank #1 (Strong Buy).
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It’s hard to ignore the company’s growth expectations, with estimates for its current fiscal year suggesting 45% earnings improvement paired with a 5% sales increase. A favorable operating environment with lowered costs has provided meaningful tailwinds for the company.
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And shares aren’t valuation stretched given the forecasted growth, with the current 13.6X forward earnings multiple comparing favorably to the respective Zacks industry average of 15.7X. The stock sports a Style Score of ‘A’ for Value.
HCA Healthcare
HCA Healthcare, a Zacks Rank #2 (Buy), is the largest non-governmental operator of acute care hospitals in the U.S. The company authorized an additional $3 billion share repurchase program in its latest quarterly print.
The company has enjoyed positive earnings estimate revisions across the board, particularly following the above-mentioned set of quarterly results in late January.
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Income-focused investors could also find HCA shares attractive, yielding a respectable 0.8% annually. Dividend growth is also apparent, with the company boasting a shareholder-friendly 10.6% five-year annualized dividend growth rate.
Bottom Line
A common way that companies amplify shareholder value is through implementing share buybacks. They can provide a nice confidence boost for investors, indicating that the company is utilizing excess cash and can help put in a floor for shares.
And recently, all three companies above – Meta Platforms META, American Eagle Outfitters AEO, and HCA Healthcare HCA – unveiled additional or fresh buyback programs.
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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
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