It’s earnings season, which means Connecticut’s publicly traded companies are disclosing how they performed in the first quarter of this year.
Economic conditions have been challenging with many companies reporting significant impacts from inflation and supply chain issues. Russia’s invasion of Ukraine is also having an impact as many companies have chosen to suspend their operations in the eastern European nation.
Another less talked about trend that’s taken hold among Connecticut’s publicly traded companies is that they’ve been implementing massive stock buyback plans.
Hartford area companies have repurchased billions of dollars of their own shares in recent months, a nationwide trend in corporate America.
In fact, companies trading on the S&P 500 repurchased $881.7 billion in shares last year, up 69.6% from 2020, according to S&P Global.
In its earnings release Thursday, The Hartford disclosed it repurchased $400 million of shares in the first quarter.
New Britain toolmaker Stanley Black & Decker has sold off multiple businesses in recent months, in part, to help finance a $4 billion share repurchase plan. The company said it repurchased $2.3 billion in shares during the first quarter alone.
Bloomfield aerospace manufacturing Kaman Corp’s board approved a $50 million share repurchase program this month.
In August, health insurer Cigna Corp. announced plans for a $2 billion accelerated stock buyback program.
What’s behind the trend? Share repurchases reduce a company’s total outstanding shares and boost remaining shareholders’ per-share profits.
Hence, the move boosts shareholder value.
Some companies have been sitting on cash and face shareholder pressure to deploy it. Stock repurchases can also help boost a company’s stock price. But stock buybacks do have drawbacks, including reducing the amount of capital available to make investments in other parts of a business.
