Stock buybacks, also known as share repurchase programs, are commonly implemented by companies to boost shareholder value.
A stock buyback occurs when a company purchases outstanding shares of its stock, essentially re-investing in itself.
There are several reasons companies elect to buy back their stock: companies have decided to utilize excess cash, want to limit dilution caused by employee stock option programs, or simply because they believe their shares are undervalued.
Three companies – NVIDIA NVDA, NVR NVR, and Ameriprise Financial AMP – have all recently unveiled repurchase programs. Let’s take a closer look at each.
NVIDIA
NVIDIA unveiled an additional sizable $25 billion share buyback following its latest blowout quarter, undoubtedly to the likes of investors. The stock is a Zacks Rank #1 (Strong Buy), with earnings estimate revisions hitting the tape across the board.
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Regarding the mentioned quarter, the company exceeded the Zacks Consensus EPS Estimate by nearly 30% and posted a 20% revenue beat.
Earnings improved 430% year-over-year, whereas revenue jumped 100% from the same period last year. Data Center revenue, which consists of AI chips, grew a remarkable 140% sequentially and 170% year-over-year, crushing expectations.
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NVR
Directors of NVR recently authorized a $500 million share buyback on August 2nd. Analysts have taken their earnings expectations higher across the board, helping land the stock into a Zacks Rank #2 (Buy).
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The company has consistently exceeded quarterly estimates, sporting an average 10% EPS beat across its last four quarters. Just in its latest release, the company beat bottom line expectations by more than 15% but delivered a slight revenue miss.
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Ameriprise Financial
Ameriprise Financial authorized an additional $3.5 billion share repurchase program in late July. The stock is currently a Zacks Rank #3 (Hold).
The company’s growth profile is hard to ignore, further reflected by its Style Score of “B” for Growth. AMP’s earnings are forecasted to climb 20% in its current year on 10% higher revenues. Peeking ahead to FY24, expectations allude to a further 12% bump in earnings paired with 7% higher sales.
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Bottom Line
A common way that companies boost shareholder value is through implementing share buybacks. In its simplest form, buybacks represent a company essentially re-investing in itself.
In addition, it can provide a nice confidence boost for investors, as the buybacks indicate that the company is utilizing its excess cash and not just hoarding it.
All three stocks above – NVIDIA NVDA, NVR NVR, and Ameriprise Financial AMP – have recently unveiled repurchase programs, attempting to maximize shareholder value.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report
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