Some of the companies on the list are just starting buybacks. Milwaukee-based Joy Global Inc., the world’s second- largest maker of mining equipment after Caterpillar Inc., will probably announce a repurchase plan in this year’s second half, CEO Michael Sutherlin told analysts on a call in February.
While Sutherlin didn’t specify the likely size of the repurchase plan, it may total $500 million to $1 billion, according to Larry De Maria, a New York-based analyst at William Blair & Co. who has an outperform rating on Joy Global.
“It would obviously benefit 2014 more, but we’d see some benefits this year too,” De Maria said in a phone interview.
Sandy McKenzie, a Joy Global spokeswoman, declined to comment.
In the first three months of 2013, companies already authorized 278 buybacks valued at $208.1 billion, putting them on pace for $833 billion on an annual basis, according to Birinyi’s Leiphart. Authorizations totaled $863 billion in 2007, their biggest year. In the first three months of 2012, companies authorized 210 buybacks totaling $126.6 billion, data compiled by Birinyi show.
Actual buybacks by S&P 500 Index members will rise to about $450 billion this year if markets remain stable, said Howard Silverblatt, senior index analyst at Standard & Poor’s. While that’s up from $400 billion in 2012 it would trail a record $589 billion in 2007, the year before the collapse of Lehman Brothers Holdings Inc. froze credit markets and deepened the longest recession since the Great Depression.
Record earnings and tepid U.S. economic growth predicted for 2013 support the environment for buybacks, said Nicholas Colas, chief market strategist at ConvergEx Group in New York.
Earnings by S&P 500 companies are poised to hit a record $111.18 a share in 2013, up from $102.94 last year, according to Nick Raich, who studies corporate earnings trends as founder and chief executive officer of the Earnings Scout, an independent macroeconomic research firm based in Cleveland.
It won’t be a steady ride toward the record, with profit growth building throughout 2013 after a slow start. The overseas slowdown may have triggered a 1.8% drop in first-quarter earnings for the S&P 500, the first decline in more than three years, analysts’ estimates compiled by Bloomberg show.
The U.S. economy may expand 2% this year, less than the 2.2% in 2012, according to the median estimate of 92 economists. U.S. payrolls grew by 88,000 workers in March, the smallest gain in nine months and less than the most-pessimistic forecast in a Bloomberg survey.
For some companies, the changing conditions make investing in their own stock a safe bet. Even billionaire Warren Buffett, who once described buybacks as a cop-out for unimaginative executives lacking other options for their money, last year cleared the way for more repurchases at Berkshire Hathaway Inc.
“The major strategy for companies to distribute money is now buybacks,” Charles Biderman, CEO of TrimTabs Investment Research, said by telephone from Sausalito, California. “Companies have this huge amount of cash and they don’t see demand growing. They are not hiring.”