Stock buybacks are generally considered a bullish signal on Wall Street. They often 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)

USANA Health Sciences (NASDAQ:USNA)


$50 million




$300 million


Time Warner (NYSE:TWX)


$5 billion


Patterson-UTI Energy (NASDAQ:PTEN)


$250 million


Procter & Gamble (NYSE:PG)


$24 billion-$30 billion


Sources: Company press releases; Motley Fool CAPS.

The CAPS advantage
Investors at CAPS seem to have mixed feelings about this group of companies announcing buyback programs, with only two of the five earning four or five stars. All of them are buying back sizeable chunks of stock -- even USANA's $50 million program, when added to the $6.8 million remaining from a previous authorization, actually represents more than 8% of its outstanding shares at current prices.

While Time Warner's program disappointed some investors who wanted to see share repurchases closer to $10 billion, the program may not be viable at any level considering its AOL division continues to be a drag on performance. Time Warner Cable (NYSE:TWC) is a top-performing asset that may be a better buy than the media outlet, which saw sales rising 59% on the strength of the acquisitions and exchange of certain cable systems with Adelphia Communications and Comcast (NASDAQ:CMCSA).

What do CAPS Fools think of Time Warner? Nearly 750 investors have weighed in on the media and communications giant, and despite the myriad problems of meshing together such disparate enterprises, the bulls still think it will beat the market. For example, jferber thinks the diversity of products and its leadership will be what propels Time Warner in the future: "twx has an incredible base of assets that will further fuel momentum over the next few years, Parsons is a great leader."

Earlier this year, jawbox indicated that even with AOL's lag, it would still be a strong contributor to Time Warner over the course of the year:

With aQuantive announcing that its billings on AOL rose nearly 300% over the first half of the year. From my experience in marketing and the online advertising space, marketers follow the leader like lemmings. More billing will come AOL's way in 2007, raising the TWX boat.

Of course, not everyone is enamored with Time Warner's prospects. kristm is one of the naysayers, and also happens to rank higher than 99.9% of all CAPS players:

This company never fails to not impress. In the last 30 years they've blown enough opportunities for any ten similar size companies. They lost control over portions of their film library in the mid-20th century and had to buy out Turner to get it all back. They sold Atari for pennies on the dollar compared to what it would be worth now (think Sony-type synergy). Also passed up a chance to help Atari's founder create the company that became Chuck E Cheese. Pathfinder could have been a top-ten Web destination if TWX had stuck with it back in the day. Online content from magazines, television, and movies has not been integrated with AOL the way it was supposed to when the two companies merged. And selling the WB music company blew their chance to integrate it with AOL to form a challenger to Apple and iTunes. Without decent integration and synergy, the individual parts of TWX are worth much more on their own than they are tied together.

So what's your take on Time Warner? Is buying back its shares folly considering the troubles it has had with AOL? Would the company be better off investing its money elsewhere? Share your opinion with thousands of your fellow investors on CAPS.

Foolish fallout
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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.