Close

Attractively Priced Share Buyback Stocks

by John Bajkowski

Attractively Priced Share Buyback Stocks Splash image

Corporate managers and directors are responsible for investing a firm’s capital to maximize shareholder value. Companies with excess cash flow need to determine if it’s best used to fund new projects, reduce debt, or return capital to shareholders through dividends or the repurchase of stock (also known as a share buyback). Share buybacks were not common until the early 1980s, but have quickly become widespread. 

Most companies buy back shares by establishing an open market share repurchase program. However, these plans do not obligate a company, and many companies fail to fulfill the repurchase plan completely.

Buybacks benefit stockholders in a number of ways. By decreasing the number of shares outstanding, the earnings per share increase for a given level of income. Shareholders are not subject to the taxes that might be incurred if the company had paid the same money out as cash dividends. Additionally, buyback companies provide shareholders with a margin of support by stepping in and buying shares. Studies have shown that companies repurchasing their shares have subsequently outperformed their benchmarks. The excess return was even stronger for value firms.

For this issue’s First Cut, we turned to the Share BuyBack Achievers Index as our starting point. This index consists of domestic, exchange-listed companies that have repurchased 5% or more of their outstanding shares for the trailing 12 months. The PowerShares Buyback Achiever Portfolio (PKW) exchange-traded fund follows this index. We screened the index looking for stocks that have a price-to-book-value ratio less than the median value for all stocks. Of these, the 30 stocks with the greatest decline in shares outstanding over the last year made the First Cut. In the table, the dividend yield points to firm’s paying out cash dividends as well as repurchasing shares. The ratio of total liabilities to total assets indicates the firm’s financial structure, while the price change highlights recent stock price performance.

Company (Exchange: Ticker) Annual
Change
in No.
Shares
(%)
Shares Outstanding Price-
to-
Book-
Value
(X)
Div
Yield
(%)
Total
Liab
to
Assets
(%)
52-Wk
Price
Change
(%)
Share
Price
(10/16)
($)
 
Latest
Qtr
(Mil)
Year
Ago
(Mil)
Two
Years
Ago
(Mil)
Three
Years
Ago
(Mil)
 
 
 
Description
Mirant Corporation (N: MIR) -27.86 145.00 201.00 252.00 285.00 0.55 0.0 62.7 4 16.28 electric company
Zale Corporation (N: ZLC) -23.09 31.97 41.57 48.69 48.81 0.50 0.0 62.7 -54 7.63 fine jewelry retailer
DSP Group, Inc. (M: DSPG) -19.82 22.73 28.35 29.50 29.34 1.02 0.0 28.8 -3 6.94 semiconductors
Infinity Property and Casualty (M: IPCC) -15.48 13.63 16.13 18.39 20.30 1.03 1.1 68.0 4 42.48 holding co for auto insurance
Vital Images, Inc. (M: VTAL) -15.09 14.29 16.83 16.97 13.46 1.22 0.0 14.9 1 12.49 medical digital images
FPIC Insurance Group, Inc. (M: FPIC) -14.76 7.40 8.68 9.42 10.28 1.02 0.0 72.6 -25 36.95 medical insurance
Loews Corporation (N: L) -14.38 435.07 508.16 534.79 552.68 1.04 0.7 79.0 10 35.89 oil & gas; insurance; hotels
American Physicians Capital (M: ACAP) -14.36 11.11 12.97 14.60 16.02 1.39 1.1 75.3 -4 30.02 medical insurance holding co
Overseas Shipholding Grp. (N: OSG) -12.26 26.86 30.62 34.14 39.52 0.64 3.9 51.9 5 44.88 bulk shipping fleet
Kadant Inc. (N: KAI) -10.49 12.27 13.70 14.12 13.82 0.88 0.0 37.7 -10 13.70 paper-making equip
Penn National Gaming (M: PENN) -9.89 78.00 86.56 85.58 84.23 0.94 0.0 58.5 74 26.08 gambling properties
Odyssey Re Holdings Corp. (N: ORH) -9.11 58.93 64.83 70.44 68.98 1.22 0.5 69.1 77 64.92 reinsurance underwriter
Marchex, Inc. (M: MCHX) -8.89 33.33 36.58 38.94 38.26 1.19 1.6 8.6 -33 5.10 local search & ad company
Molina Healthcare, Inc. (N: MOH) -7.89 25.79 28.00 28.28 27.97 0.93 0.0 55.6 -23 19.24 healthcare services
Aetna Inc. (N: AET) -7.87 442.80 480.60 509.20 546.20 1.26 0.2 75.9 -17 25.22 healthcare benefit company
PCTEL, Inc. (M: PCTI) -7.72 17.62 19.09 20.90 20.81 0.90 0.0 5.4 -21 6.32 antennas for broadband
M & F Worldwide Corp. (N: MFW) -7.66 19.30 20.90 21.00 19.90 0.97 0.0 87.4 -15 23.48 financial data mgmt
Sears Holdings Corp. (M: SHLD) -7.53 119.10 128.80 144.70 155.60 0.90 0.0 64.0 15 70.08 broadline retailer
Torchmark Corporation (N: TMK) -7.52 82.73 89.46 94.32 99.73 1.42 1.2 82.2 15 45.15 insurance holding co
WellPoint, Inc. (N: WLP) -7.16 482.50 519.70 593.40 627.90 1.00 0.0 54.9 16 46.16 health benefits co
Seacor Holdings, Inc. (N: CKH) -7.11 19.84 21.36 23.55 24.63 1.04 0.0 50.8 57 90.87 marine transport servs
Universal Corporation (N: UVV) -7.11 24.99 26.90 27.26 25.94 1.29 4.1 52.3 10 44.59 unitary thrift holding co
Electronics For Imaging (M: EFII) -7.00 49.11 52.81 56.68 56.56 1.01 0.0 19.1 22 12.24 printers & print mgmt solutions
Cogo Group, Inc. (M: COGO) -6.93 36.33 39.04 36.97 32.20 1.13 0.0 21.9 36 6.69 technology solutions
Hackett Group, Inc., The (M: HCKT) -6.79 37.89 40.66 44.13 44.65 1.27 0.0 21.0 -21 3.25 business consulting servs
U.S. Concrete, Inc. (M: RMIX) -6.74 36.10 38.71 38.23 36.85 1.13 0.0 88.3 -31 1.80 ready-mixed concrete
CDI Corp. (N: CDI) -6.66 18.93 20.29 20.21 19.94 0.88 3.8 23.9 0 13.76 engineer & IT outsource sols
CSS Industries, Inc. (N: CSS) -6.34 9.61 10.26 10.73 10.62 0.79 2.9 28.3 -3 20.83 gift cards & wrap; decorations
Assisted Living Concepts (N: ALC) -6.31 11.81 12.60 13.63 13.87 0.99 0.0 43.0 7 22.50 assisted-living homes
Silicon Storage Tech. (M: SSTI) -5.94 95.75 101.79 104.13 103.36 0.92 0.0 15.2 -28 2.31 flash memory semiconductors

 

John Bajkowski is president of AAII.


Discussion

No comments have been added yet. Add your thoughts to the discussion!

You need to log in as a registered AAII user before commenting.
Create an account

Log In