Apple Leads Stock Buybacks in 2014

Strategic Insights -

Apple ([STOCK[NASDAQ:AAPL]]) repurchased a record $45 billion of its stock in 2014, surpassing Exxon Mobil ([STOCK[NYSE:XOM]]) as the largest stock buyer among S&P 500 companies. This marked a significant increase from the $26 billion spent in 2013, a 74% jump that far exceeded the $13.1 billion spent by Exxon Mobil. The company's spending was followed by Intel ([STOCK[NASDAQ:INTC]]) at $10.8 billion and IBM ([STOCK[NYSE:IBM]]) at $10 billion. The total stock buybacks by S&P 500 companies reached $553 billion in 2014, a 16% increase from the previous year.

Key Takeaways:

  • Apple's stock buybacks totaled $45 billion in 2014, the largest among S&P 500 companies, surpassing Exxon Mobil's $13.1 billion.
  • The technology sector dominated stock buybacks, accounting for 24% of the total annual spend, followed by consumer discretionary at 17%.
  • The sector share declined in Q4, attributed to Apple's reduced spending from $17 billion in Q3 to $5 billion in Q4.
  • The number of outstanding shares is reduced when companies repurchase stocks, increasing the relative ownership of each investor and improving the price-to-earnings ratio.
  • Share count reduction has significantly increased earnings-per-share for 20% of the index issues in each of the past four quarters, according to Howard Silverblatt, analyst at S&P Dow Jones Indices.
  • The total stock buybacks by S&P 500 companies reached $553 billion in 2014, a 16% increase from the previous year.

Statistics:

  • $45 billion: Apple's total stock buybacks in 2014.
  • $13.1 billion: Exxon Mobil's total stock buybacks in 2014.
  • 74%: Increase in Apple's spending on stock buybacks from 2013 to 2014.
  • 16%: Increase in total stock buybacks by S&P 500 companies from 2013 to 2014.
  • $553 billion: Total stock buybacks by S&P 500 companies in 2014.
  • 24%: Share of sector spend in information technology in 2014, including Apple's reduced spending.
  • $17 billion: Apple's stock buybacks in Q3 2014.
  • $5 billion: Apple's stock buybacks in Q4 2014.

Sources:

  • [S&P Dow Jones Indices report]
  • [Investor's Business Daily]
  • [Brian Deagon's Twitter account: @IBD_BDeagon]