With limited growth prospects and interest rates near record lows, many companies have been borrowing money to buyback massive amounts of their outstanding shares.
Just last month, Apple announced it would tap the bond markets to finance a $50 billion expansion to its stock buyback plan.
For investors looking at earnings per share, these buybacks lower share counts, effectively accelerating EPS growth while net income growth may be more modest.
Below is a chart of buyback announcements via Deutsche Bank’s “Equity House View” report.
“Buyback announcements over the past 3 months total a record $214bn, or double the quarterly pace of actual repurchases (~$100bn),” write the analysts.
Some of that is due to Apple. Regardless, that’s a lot of stock being pulled out of the market.