Attractively Priced Share Buyback Stocks
by John Bajkowski
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.
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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) ($) |
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|
Latest Qtr (Mil) |
Year Ago (Mil) |
Two Years Ago (Mil) |
Three Years Ago (Mil) |
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| 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 |
|
Exchange Key: A=American Stock Exchange; M=NASDAQ; N=New York Stock Exchange. Source: AAII's Stock Investor Pro, Thomson Reuters, and I/B/E/S. Data as of 10/16/2009. |
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