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)



$5 billion


Sears Holdings (NASDAQ:SHLD)


$1 billion




$1 billion


Tidewater (NYSE:TDW)


$200 million


Rohm & Haas (NYSE:ROH)


$2 billion


Sources: Company press releases; Motley Fool CAPS

The CAPS Advantage
Investors at CAPS are feeling pretty excited about this selection of stocks announcing buyback programs, with three of the five companies earning four or five stars. And all of them -- except the world's largest global offshore energy fleet operator, Tidewater -- are buying back impressive amounts of stock, from $1 billion to $5 billion worth. Yet if Tidewater were to buy back all of the stock it can at today's prices, it would amount to nearly a 5% reduction in shares outstanding.

Sears is working hard to create value for shareholders, though unfortunately, this has little to do with boosting sales at the retailer. Last month, it reported yet again that comps dropped for the eighth straight quarter, and CEO Eddie Lampert has been stretched thin in devising ways to give shareholders reasons to smile. Sears' three-star rating shows that the CAPS community is no longer enthralled, but a $1 billion share buyback may buy some time.

Still, top-rated All-Star JohnnyLC, with a player rating higher than 99% of all other CAPS investors, notes that this isn't the first big buyback for Sears:

Eddie Lampert is the real deal. In May, they bought back 1.2 million shares. Encouraging initiatives include brand relaunches, growth of Land's End, commitment to Sears Grand, and new IT systems.

Similarly rated ButtSauce also believes in the Lampert touch:

I trust Lampert knows what he is doing. Sears is performing okay - it seems to be making decent moves - it is just up against two mega giants. I expect him to keep selling certain stores and building up cash, and eventually you'll see him buy up another company at a bargain price. He may be stalling until the market hits a rough patch. Lampert and Buffett excel at finding bargain stocks, and if Lampert doesn't see what he's looking for, it's better to try and reinvent the stores he has control over rather than sell them off and then sit on cash and make no money for his shareholders. People assumed Lampert would be too clueless to make a retail giant work, but I'm sure they said the same thing when he got control over AutoZone (NYSE:AZO).

So what's your take on the Buffett wannabe's magic? Is Sears Holdings holding steady, or running into the ground? Will Tidewater lift all shareholders' boats, or is Amgen ready to inoculate us?

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.