Stock buybacks are often considered a bullish sign that management thinks its company's stock is cheap. By investing in their company, executives can not only get a better return, but also return capital to shareholders, just like dividends.

A quick take on buybacks
Done right, repurchasing shares increases earnings per share, assuming profits remain stable. A company with $1 million in earnings and 1 million shares outstanding will have EPS of $1.00. Buying back 250,000 shares leaves 750,000 shares outstanding; if total profits remain $1 million, the company's EPS will increase 33% to $1.33 ($1 million divided by 750,000).

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.

We're looking for companies that have announced stock buyback programs. Then we'll head over to Motley Fool CAPS to get 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

Henry Schein (NASDAQ:HSIC)


$100 million*




4 million shares


Pain Therapeutics (NASDAQ:PTIE)


$20 million


Norfolk Southern (NYSE:NSC)


75 million shares*


First State Bancorp (NASDAQ:FSNM)


5% of outstanding shares


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?

  • Top-rated all-star CAPS player PopsDaniecki sees the railroad operator Norfolk Southern as an easy decision to make: "Rail, more 'stuff', moved farther, CHEAPER, than any other means. Energy shortage? Fuel problems? Costs of doing business going up here compared to other means? This really seems like one that doesn't require anything but the ability to push a button! The one marked 'PROCESS ORDER'."
  • Pain Therapeutics is a small biopharmaceutical trading around 26% lower than its recent highs. greenwavenick, another top-rated CAPS player, notes: "They have three drugs in the pipeline including one, Oxytrex, that just began Phase III of FDA Approval and another, Remoxy, that is farther along in them. Additionally, PTI-202 just successfully completed its Phase I FDA Approval.

    "PTIE entered into an agreement with King Pharmaceutical to finance the R&D of these drugs. Under the terms of the agreement, PTIE received an upfront payment of $150M, will received $150M in milestone payments and King is responsible for all costs related to the development of these products...

    "Furthermore, PTIE has $214M in cash on hand ($4.84 per share), meaning 56% of the market cap is in cash. The company does not report any debt. They also have strong insider ownership at 37%."

Tracking their commitment
Later on, we'll follow up and see whether these companies have followed through on their buyback announcements. A company's promise to repurchase its stock doesn't guarantee that it ever actually will. Sometimes, companies will announce a share buyback just to prop up the stock price, so we'll check in with these firms later to see whether they've 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 thousands of your fellow investors. Click here to sign up 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.