Stock buybacks are seen as a bullish sign that management thinks its stock is cheap. Not only can they get a better return by investing in their company, but it's also a way for companies to return capital to shareholders, just like dividends.

A quick take on buybacks
Done right, repurchasing shares increases earnings per share, assuming that profits at least maintain their present level. A company with $1 million in earnings and 1 million shares outstanding will have EPS of $1.00. Buying back 250,000 shares so that only 750,000 shares remain outstanding -- and total profits are still $1 million -- means EPS will increase 33% to $1.33 (1 million divided by 750,000 is 1.33).

Buybacks boost earnings per share without any new profit growth. Couple that with actual expanding profits and you have an explosive combination of earnings-per-share growth. Here's last week's list of buyback contenders.

First, we'll find companies that have announced stock buyback programs. Then we'll head over to Motley Fool CAPS to gain some insight into what the investing community thinks the best prospects are. If companies announce stock buybacks, and CAPS' top investors endorse their prospects for the future, Fools should take notice.

Here's the latest list of some of the companies to announce share repurchase programs.


Buyback Announcement Date

Amount of Buyback

CAPS Rating

Wells Fargo (NYSE:WFC)


75 million shares


Ligand Pharmaceutical (NASDAQ:LGND)


$100 million


Genworth Financial (NYSE:GNW)


$600 million*


Factset Research Systems (NYSE:FDS)


$100 million


Source: Company press releases; CAPS ratings courtesy of Motley Fool CAPS.
*Expanded previously announced buyback program.

The CAPS advantage
Every day, tens of thousands of investors rank whether thousands of stocks will outperform or underperform the market. CAPS, the Fool's collective intelligence service, takes those ratings from professional and amateur investors alike, overweights the most successful and accurate opinions, and assigns each company a CAPS rating from one to five stars.

So what do Fools have to say?

  • jonock says Factset Research " Crunch's financial numbers, feeds stats to Wall Street, there's always a market for their product."
  • Wells Fargo garnered this top bullish pitch from goalie37: "All around great company. Buffett owns a big piece of it, 3.1% dividend yield, increasing quarterly earnings (year over year) since 2001, P/E of 14, 19% net margins, net loan growth from $168 billion to $306 billion in last 5 years, retained earnings growth from $16 billion in 2001 to $30 billion in 2005."

Tracking their commitment
Later on, we'll follow up with these firms to see whether they've followed through on their announcements. Just because a company says it's going to repurchase its stock doesn't mean it actually will. Sometimes, companies will announce a share buyback just to prop up the stock price. We'll see whether these firms lived up to their word.

Foolish fallout
You've seen what the companies have said. You've read what the CAPS players think. Now it's time to add your voice. Motley Fool CAPS is a completely free, fun service where you can pit your intellect against tends of thousands of your fellow investors. Click here to signup today.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.