Stock buybacks are generally considered a bullish signal, since they imply that management believes the company's stock is selling for a bargain on Wall Street, and that investing in itself will yield its best return on investment. Like dividends, buybacks also let companies return additional capital to shareholders.

How buybacks work
Done right, share repurchases will increase earnings per share, so long as profits stay at least at the same level. A company with $1 million in earnings and 1 million shares outstanding will have EPS of $1. Now, if it buys back 250,000 shares, leaving only 750,000 shares outstanding -- and total profits remain $1 million -- its new EPS would be $1.33, or $1 million divided by 750,000.

We're looking for companies that have announced stock buyback programs and 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 a list of some of the latest companies to announce share repurchase programs.


Buyback Announcement Date

Amount of Buyback

CAPS Rating

Tribune (NYSE:TRB)


126 million shares


Global Payments (NYSE:GPN)


$100 million


USANA Health Sciences (NASDAQ:USNA)


$40 million




$10 billion


Linear Technology (NASDAQ:LLTC)


$3 billion


Source: company press releases; CAPS ratings courtesy of Motley Fool CAPS.

The CAPS advantage
Now we'll turn to CAPS, the Fool's collective intelligence service, and see what some of the best have to say about these companies.

While the Tribune buyback is really a "going private" deal -- billionaire entrepreneur Sam Zell is buying up the company -- CAPS investors never really thought much of it as an investment. According to CAPS participant NetScribeMedia, advertising revenue is expected to rise only 1% over the next five years, as more advertising moves to the Internet. There was never much to warrant an investment.

Compare that with Global Payments, which has earned a five-star rating from the investment community. The company intends to use its buyback plan to offset dilution from the employee benefits plan it issued shares to. Despite an earnings "miss" last month -- it beat profit expectations but revenues came in light -- the payment processor still has a strong franchise, and as top-rated player pennyplants notes, "is a cash machine with strong fundamentals." With a business model that's similar to First Data (NYSE:FDC) and Western Union (NYSE:WU), there's no debt and generous amounts of cash sitting on the balance sheet.

Here's what other CAPS players think now that the stock tumbled as much as 39% from its recent highs:

  • CAPS investor minorgod says Global Payments is "another stock that has been killed recently despite strong earnings," which exists in an "industry that is growing much more quickly and there's still tons of money to be made in the electronic payment processing world."
  • hybridinvestor sums it up by saying, "Great margins, great return metrics, great balance sheet, still great prospects even with the current inline forecast and lowered view. We just got the opportunity to start accumulating on the way down from here near-term."

The opinion from the CAPS community is virtually unanimous that Global Payments will outperform the market, as no bearish comments have been posted. How about you? Do you have an upbeat attitude toward these share-repurchasing companies?

Foolish fallout
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. JPMorgan is an Income Investor pick. The Motley Fool has a disclosure policy.