Data: Compustat, Goldman Sachs Global Investment Research; Chart: Axios Visuals
The earnings environment is going so well for big companies that they're announcing new stock buyback plans at a record pace.
Why it matters: Last year, stock buyback activity fell sharply as companies were hanging onto cash amid extreme uncertainty. The about-face shows that confidence is up, along with earnings.
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By the numbers: S&P 500 companies have approved plans for a whopping $567 billion worth of stock buybacks since the beginning of the year through mid-June, according to a new Goldman Sachs report. This is a record for this part of the year.
Goldman analysts expect companies to follow through with those approvals and execute $726 billion in buybacks this year, up 35% from $537 billion in 2020.
Context: This isn’t the only thing companies are spending money on. Capital expenditures, R&D and acquisitions are all expected to be above pre-pandemic levels.
The bottom line: Corporate cash flows are very strong right now. And business confidence is high enough that America’s biggest companies are happy to shovel cash to their shareholders.
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