Corporate buybacks on pace for better start to 2023 than last year

NEW YORK Reuters - Corporate stock buybacks offer investors a measure of excitement in what has been a gloomy earnings season.

Corporate buybacks are on pace for a stronger start to 2023 than a year ago in terms of dollar value, though fewer companies are announcing them. Here is a closer look at buyback trends:

According to EPFR TrimTabs, companies have announced $173.5 billion worth of planned buybacks so far this year, just over double last year's pace. According to EPFR TrimTabs, the record amount of buyback announcements reached $1.22 trillion in the year 2022.

There have been fewer companies that have announced buybacks this year. As of this time last year, 78 companies have announced buybacks compared to 125 companies, according to EPFR TrimTabs, which tracks announcements by companies listed on the New York Stock Exchange, Nasdaq and American Stock Exchange.

S&P 500 companies are expected to have completed $220 billion in buybacks in the fourth quarter of 2022, according to S&P Dow Jones Indices. That is up from $210.8 billion in the third quarter, but down from $270 billion in the fourth quarter of 2021.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said that 2023 should be the first fiscal year with at least $1 trillion in completed S&P 500 company buybacks.

According to Credit Suisse, the buybacks contributed 3.7% to S&P 500 earnings-per-share growth for the fourth quarter. S&P 500 earnings fell by 2.1% in the quarter as of Friday, according to Credit Suisse.

The S&P 500 buyback index, designed to measure performance of stocks with the highest buyback ratios, was up 8.9% in 2023 against a 7.7% gain for the broad S&P 500 during that time. The buyback index fell 12.7% in 2022 compared to a 19.4% decline for the overall S&P 500.