Stock buybacks are generally considered a bullish signal on Wall Street. They announce management's belief that its stock is cheap, and that its own shares will provide its best return on investment. Like dividends, buybacks also let companies return 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 seeking companies that have announced stock buyback programs. Then we'll head over to Motley Fool CAPS to get some insight into the investing community's preferred picks. If companies announce stock buybacks, and CAPS' top investors endorse their future prospects, Fools should take notice.

Here are some of the latest companies to announce share repurchase programs.


Buyback Announcement Date

Amount of Buyback

CAPS Rating (out of 5)

DynCorp International (NYSE:DCP)


$10 million


MasterCard (NYSE:MA)


$500 million


Arcelor Mittal (NYSE:MT)


27 million shares


National Semiconductor (NYSE:NSM)


$2 billion


Wynn Resorts (NASDAQ:WYNN)


$1.2 billion


Sources: Company press releases, Motley Fool CAPS.

The CAPS advantage
Investors feel better about the chances of this group of companies beating the market than they did about last week's crop, which had less-favorable ratings from the more than 29,000 rated members of CAPS.

Global steel producer Arcelor Mittal is still seen as benefiting from the global demand for steel, even though the U.S. might be sagging lately. Metals of all kinds have seen increased demand, and consolidation continues to pick up steam in an effort to grind out economies of scale. It was only a year ago that MittalSteel and Arcelor decided to hook up.

  • Top-rated CAPS player iLikePie believes the international arena will be what drives Arcelor forward. "A big advantage for this company is their global operations. Though the US housing and building market is on a bit of a decline, development in other areas of the world is still truckin' along. MT's growth may indeed slow for a while this year, but this game is about outperforming or underperforming. The key term with this co. is OUTperform the S&P, not necessarily spank the pants off of every other steel producer out there."
  • Another All-Star, DocHeck, agrees. "10% world market share! Bought up many small, struggling mills throughout the world, forming a network of plants world-wide that can now accommodate customers by delivering product to anyone from a nearby facility. I expect a volatile, rocky ride with this stock, but expect profits over the next few years based upon their global saturation."

The global view is what keeps MasterCard bulls believing in the growth story. Despite rival Visa's coming public debut, nearly one-quarter of CAPS players who have rated this stock are All-Stars who see MasterCard continuing to beat the market.

  • alanknit says: "Global trend of more people using plastic tomorrow than today. Less people using paper tomorrow than today. More people using debit than credit. Worldwide trend to mass expansion of financial tools for the world's largest populations. Visa can't get to the market fast enough."
  • Yet market analysis and research firm Netscribes sees some potential troubles overseas: "The biggest hurdle for the company would be the New Zealand Commerce Commission civil proceedings against MasterCard for anticompetitive arrangements in setting interchange fees. The penalty for the same could be to the tune of US$6.6 million per breach or three times the commercial gain resulting from the breach or 10% of a company's turnover. Moreover they have pending lawsuits by various governments and regulatory bodies of European Union for whose legal liabilities are still not known with projections of consuming [up to] 10% of the company's value. Though, its price is almost twice now, after getting listed at a premium, the attitude of its previous member banks has been to reduce their exposure to the company."

What's your take? Does the global economy continue to grow and allow these international players to grow with it, or will opportunities contract as foreign markets stumble?

Foolish fallout
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MasterCard is a recommendation of Motley Fool Inside Value.

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