On Tuesday, Wal-Mart Stores, Inc. (WMT) announced a $20 billion stock share buyback, which simply means they’re planning to buy $20 billion worth of their own stock from the market.
Now investors and traders generally love buybacks because they drive a company’s market value, earnings per share (eps), and dividend payout higher.
But – despite Wal-Mart’s announcement – we’re smack dab in the middle of about a year-long “buyback drought.” In fact, the number of buybacks by S&P 500 companies only reached $120 billion in this year’s second quarter.
While $120 billion may seem like a large number, it’s down nearly 10% from the first quarter alone and 5.8% from this same period a year ago.
And that could have huge impacts on your portfolio – especially this earnings season.