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Buyback activity gained significant momentum with 20 companies announcing buybacks last week. The $10 million buyback by Viomi Technology (VIOT) topped our list, representing around 20% of its market cap at announcement. Two significant buybacks in dollars that could not make it to the top 5 were the $12 billion buyback announced by Visa (V) and the $3 billion buyback announced by L3Harris Technologies (LHX) representing around 3% and 6.5% of their market caps at announcement respectively.
On October 20, 2022, Snap (SNAP) announced a new $500 million share repurchase plan that represents around 3% of its market cap at announcement. Repurchases under this program will be funded from existing cash and cash equivalents. As of September 30, 2022, Snap had $4.4 billion in cash and $3.74 billion in long-term debt, leaving it with just enough net cash to execute on this buyback.
SNAP’s stock dropped 28% last week after it reported Q3 earnings and posted a quarterly net loss of $360 million. Despite the 24% bounce in the stock this week, it is still down more than 82% over the last year. The slowdown in advertising spend that Snap experienced is not isolated to the company. Alphabet (GOOG) reported Q3 2022 results today and indicated that YouTube revenue dropped 1.87% year-over-year. Overall revenue for Alphabet was up 6% year-over-year, the same increase that Snap posted. The market was not thrilled that Snap did not provide revenue or EBITDA guidance for Q4 2022.
We will learn more about the state of online advertising when Meta (META) reports results on Wednesday and Pinterest (PINS) reports results on Thursday. Following the latest drop in Snap’s stock, the company is now trading at less than 3 times sales. An investor quipped that Snap once wanted to be known as a camera company and it is now being valued like one.
While this buyback announcement is mildly encouraging, net income is negative. Over the trailing twelve months, the company posted a net loss of $1.12 billion and stock based compensation was $1.23 billion. The buyback, even if it is fully executed, will barely offset the dilution from options issued to employees. Just like insiders sometimes buy stock to signal the market, some of these buybacks appear to be nothing more than an attempt to signal the market.
Welcome to edition 30 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week. The companies in the list below are the ones that announced the largest buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap stocks with a market cap below $2 billion.
Top 5 Stock Buyback Announcements
1. Viomi Technology Co., Ltd (VIOT): $0.81
On October 25, 2022, the Board of Directors of this household appliances seller approved a new share repurchase program authorizing the company to repurchase up to $10 million of its class A common stock equal to nearly 19.5% of its market cap at announcement.
| Market Cap: $49.12M | Avg. Daily Volume (30 days): 45,663 | Revenue (TTM): $600.83M |
| Net Income Margin (TTM): -2.39% | ROE (TTM): -6.21% | Net Cash: $141.61M |
| P/E: N/A | Forward P/E: 6.53 | EV/EBIDTA (TTM): 8.95 |
2. Tenet Healthcare Corporation (THC): $41.41
On October 20, 2022, the Board of Directors of this healthcare services company approved a new share repurchase program authorizing the company to repurchase up to $1 billion of its class A common stock equal to nearly 17% of its market cap at announcement.
| Market Cap: $4.21B | Avg. Daily Volume (30 days): 2,100,780 | Revenue (TTM): $19.15B |
| Net Income Margin (TTM): 2.91% | ROE (TTM): 27.75% | Net Debt: $13.89B |
| P/E: 4.65 | Forward P/E: 4.97 | EV/EBIDTA (TTM): 6.08 |
3. Range Resources Corporation (RRC): $28.60
On October 21, 2022, the Board of Directors of this independent natural gas and oil company approved an additional share repurchase program authorizing the company to repurchase up to $1 billion of its class A common stock, representing nearly 14.7% of its market cap at announcement.
| Market Cap: $5.65B | Avg. Daily Volume (30 days): 4,682,620 | Revenue (TTM): $4.80B |
| Net Income Margin (TTM): 11.2% | ROE (TTM): 30.69% | Net Debt: $2.38B |
| P/E: 12.51 | Forward P/E: 4.56 | EV/EBIDTA (TTM): 17.2 |
4. Global Indemnity Group, LLC (GBLI): $21.88
On October 21, 2022, the Board of Directors of this insurance company approved a new share repurchase program authorizing the company to repurchase up to $32 million of its class A common stock equal to nearly 11% of its market cap at the announcement.
| Market Cap: $308.71M | Avg. Daily Volume (30 days): 3,687 | Revenue (TTM): $633.96M |
| Net Income Margin (TTM): -1.49% | ROE (TTM): -1.4% | Net Cash: $41.93M |
| P/E: 60.78 | Forward P/E: N/A | EV/EBITDA (TTM): 18.26 |
5. NexPoint Residential Trust, Inc. (NXRT): $45.85
On October 24, 2022, the Board of Directors of this REIT approved an additional share repurchase program authorizing the company to repurchase up to $100 million of its class A common stock, equal to nearly 9.5% of its market cap at announcement.
| Market Cap: $1.05B | Avg. Daily Volume (30 days): 169,015 | Revenue (TTM): $241.43M |
| Net Income Margin (TTM): 8.65% | ROE (TTM): 4.51% | Net Debt: $1.59B |
| P/E: 50.46 | Forward P/E: 26.53 | P/AFFO (TTM): 12.5 |
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