S&P Companies Repurchase Less in Q3, But Outstanding Shares at Multi-Year Lows

December 27, 2012 2:41 PM EST
In an effort to return some value to shareholders, companies will generally repurchase outstanding common to hold in treasury, making each outstanding share more valuable in the process.

That effort was put on hold in the third quarter for S&P 500-listed stocks, according to the latest data out of FactSet Research. The firm said S&P companies spent $93.4 billion on buybacks in the quarter, down 15.1 percent from the prior quarter and 25.8 percent from the same period in 2011.

FactSet also noted that the average spent on buybacks was more than half of free cash flow (FCF). Data points to companies spending 65.3 percent of FCF on buybacks through the quarter. Consumer staples spent about 116.3 percent of FCF while consumer discretionary spent just 106.8 percent. Despite negative FCF, energy and utilities spent $38.6 billion and $1.9 billion on buybacks.

Overall, total common outstanding in the S&P was at 299.1 billion through the end of the third quarter, the lowest its been since late 2008.

Investors shouldn't be totally put off on buybacks; many companies announced large authorizations in the current quarter. Bed Bath & Beyond, Inc. (Nasdaq: BBBY) plans a $2.5 billion buyback, General Electric (NYSE: GE) just announced a $10 billion approval, St. Jude (NYSE: STJ) and Macy's (NYSE: M) are planning $1 billion each. For more notable buybacks, click here.

The S&P is down over 1 percent on today's session.

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