3 Stocks with Strong Buyback Programs Share buybacks can drive stock prices higher and reflect management's confidence in the company's prospects. Explore how fundamentally sound stocks including Mastercard (MA), Intuit (INTU), and W. R. Berkley (WRB)...
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Share buybacks can drive stock prices higher and reflect management's confidence in the company's prospects. Explore how fundamentally sound stocks including Mastercard (MA), Intuit (INTU), and W. R. Berkley (WRB) are leveraging strategic repurchases to enhance shareholder value and growth prospects. Read more.
Companies actively repurchase shares to boost stock prices by reducing the number of shares outstanding, which can enhance the EPS, often leading to a higher stock price. Buybacks also serve as a means to return surplus capital to shareholders and can be a tax-efficient alternative to dividends and help manage dilution from employee stock options or grants.
Overall, share buybacks reflect management's confidence in the company's value and provide flexibility in capital allocation. Thus, investors could consider adding these three stocks Mastercard Incorporated (MA), Intuit Inc. (INTU), and W. R. Berkley Corporation (WRB) to their portfolios with solid buyback programs.
A stock buyback is when a company repurchases its own stock from the market, reducing the number of shares outstanding. When executed effectively, share buybacks can bolster a company's stock price, improve financial metrics such as earnings per share (EPS) and return on equity (ROE), and return surplus capital to shareholders.
Moreover, share repurchases often suggest that the company's management believes its stock is undervalued, positioning it as an attractive investment opportunity. This confidence can positively influence market perceptions and investor sentiment, potentially leading to a favorable shift in the company's stock performance.
As such, identifying companies with significant buyback initiatives offers investors valuable insight into where corporate leaders see the greatest potential for value creation. In this context, stocks such as MA, INTU, and WRB stand out as ideal investments for their strategic buyback programs.
Mastercard Incorporated (MA)
MA is a global technology company that offers transaction processing and other payment-related products and services. It provides integrated products and value-added services to account holders, merchants, financial institutions, digital partners, businesses, governments, and other organizations.
During the second quarter of 2024, Mastercard repurchased around 5.8 million shares for $2.6 billion. Moreover, through the first half of 2024, the company repurchased 10.2 million shares at $4.6 billion. Quarter-to-date through July 26, MA repurchased 1.9 million shares at $820 million, which leaves $8.7 billion remaining under the approved share repurchase programs.
On June 3, MA launched its global Biometric Checkout Program in Latin America (LAC). With partners Ingenico, Fulcrum Biometrics, Fujitsu Frontech, and Scanntech, Mastercard expanded an in-store biometric payment experience at Tienda Inglesa's Red Expres in Uruguay. With such collaborative innovation, MA can deliver more seamless, secure payment experiences.
In May, Mastercard and the African Development Bank Group announced the Mobilizing Access to the Digital Economy (MADE) Alliance: Africa to expand digital access to critical services to around 100 million individuals and businesses in Africa over the next decade.
For the second quarter that ended June 30, 2024, MA's net revenue increased 11% year-over-year to $6.96 billion. Its operating income rose 10.4% from the year-ago value to $4.04 billion. The company's adjusted net income and adjusted EPS came in at $3.30 billion and $3.59, up 22.2% and 24.2% from the previous year's quarter, respectively.
Analysts expect MA's revenue for the third quarter (ending September 2024) to increase 11.1% year-over-year to $7.26 billion. Its EPS for the current quarter is expected to grow 10% year-over-year to $3.73. In addition, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of MA have soared 4.2% over the past month and 14.3% over the past year to close the last trading session at $455.69.
MA's robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
MA has a B grade for Quality and Stability. It is ranked #11 out of 46 stocks in the Consumer Financial Services industry.
In addition to the POWR Ratings I've just highlighted, you can see MA's ratings for Sentiment, Momentum, Growth, and Value here.
Intuit Inc. (INTU)
INTU provides financial management and compliance products and services for consumers, small businesses, self-employed, and accounting professionals internationally. The company operates through Small Business & Self-Employed; Consumer; Credit Karma; and ProTax segments.
In the third quarter of 2024, Intuit repurchased $584 million of shares, with $2.1 billion remaining on the company's share repurchase authorization.
On June 13, INTU signed an agreement to acquire technology from prominent mobility risk intelligence provider Zendrive. Certain Zendrive employees, including CEO Dennis Ellis and Co-founder and CTO Pankaj Risbood, will join INTU's Credit Karma to accelerate innovation and adoption of its usage-based auto insurance product, Karma Drive.
Also, on the same day, INTU previewed its new revenue intelligence (RI) technology, which is a system of predictive and generative artificial intelligence models to proactively provide marketers with opportunities to win more revenue. Mailchimp's revenue intelligence will provide powerful AI and automation tools to assist businesses find and win untapped revenue.
In addition, Intuit's Mailchimp launched marketing tools in the United Kingdom, following the initial U.S. launch last June.
During the third quarter that ended on April 30, 2024, INTU's total revenue increased 11.9% year-over-year to $6.74 billion. Its non-GAAP operating income rose 10.5% from the year-ago value to $3.71 billion. The company's non-GAAP net income was $2.80 billion, or $9.88 per share, up 11.1% and 10.8% from the prior year's quarter, respectively.
Intuit raised its guidance for the fiscal year 2024. The company expects full-year revenue of $16.164 billion to $16.200 billion, a growth of nearly 13%, up from the prior guidance for growth of 11-12%. Its non-GAAP operating income is expected to be $6.360-$6.380 billion, a growth of approximately 16%, up from the previous guidance for growth of 12-14%.
Further, INTU's non-GAAP earnings per share are expected to be $16.79 to $16.84, a growth of around 17%, above the previous guidance for growth of 12-14%.
Street expects INTU's revenue for the fourth quarter (ended July 2024) to increase 13.8% year-over-year to $3.09 billion and its EPS for the same period is expected to grow 12.7% year-over-year to $1.86. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
INTU's stock has gained 24% over the past year to close the last trading session at $627.41.
INTU's POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Growth and Sentiment. Within the Software – Application industry, INTU is ranked #25 out of 133 stocks.
Click here to access additional ratings of INTU (Value, Stability, and Momentum).
W. R. Berkley Corporation (WRB)
WRB is a global insurance holding company that runs as a commercial lines writer. The company operates in two segments: Insurance and Reinsurance & Monoline Excess. It underwrites commercial insurance business, including excess and surplus lines, admitted lines, and specialty personal lines: offers accident and health insurance products; and other services.
During the six months ended and three months that ended June 30, 2024, WRB repurchased 4,298,510 shares of its common stock for $223.8 million.
On June 12, WRB's Board of Directors declared a special cash dividend on its common stock of $0.50 per share paid on June 28, 2024, to stockholders of record on June 24, 2024. The Board also raised the regular cash dividend by 9.1% from the present rate. The first regular quarterly dividend at the new rate of $0.12 per share was paid on the same date.
WRB pays an annual dividend of $0.32, which translates to a yield of 0.56% at the current share price. Its four-year average dividend yield is 1.82%. Moreover, the company's dividend payouts have increased at a CAGR of 11.3% over the past three years. WRB has raised its dividends for 18 consecutive years.
Furthermore, the company's Board of Directors approved a 3-for-2 common stock split paid in the form of a stock dividend to holders of record on June 24, 2024.
In the second quarter of 2024, WRB's net premiums earned increased 11.5% year-over-year to $2.85 billion. Its total revenues grew 10.6% from the prior year's quarter to $3.31 billion. Its operating income rose 34.5% from the year-ago value to $418.11 million.
Additionally, the company's net income to common stockholders came in at $371.91 million, or $0.92 per share, increases of 4.4% and 5.7% from the previous year's quarter, respectively.
Analysts expect WRB's revenue and EPS for the third quarter (ending September 2024) to increase 10.9% and 5.1% year-over-year to $2.93 billion and $0.95, respectively. Further, the company surpassed the consensus EPS estimates in all four trailing quarters.
WRB's stock has surged 7.6% over the past six months and 38.1% over the past year to close the last trading session at $57.16.
WRB's sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Momentum and a B for Stability. WRB is ranked #21 among 55 stocks in the A-rated Insurance – Property & Casualty industry.
Click here to access WRB's ratings for Quality, Growth, Value, and Sentiment.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
MA shares were unchanged in premarket trading Tuesday. Year-to-date, MA has gained 7.32%, versus a 12.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet's keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet's looks to help retail investors understand the underlying factors before making investment decisions.
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