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Here is how corporate stock buybacks are changing the earnings picture

Scott Gamm
Runners taking off from starting blocks on track

Earnings season is underway, and corporate buybacks are set to boost earnings per share for S&P 500 (^GSPC) companies.

That’s the assessment from Credit Suisse strategists, led by chief U.S. equity strategist Jonathan Golub and senior equity strategist Patrick Palfrey.

Credit Suisse expects S&P 500 earnings to decline by 2.1% year-over-year, but earnings per share is expected to grow by 0.2%. Earnings per share accounts for corporate buybacks. Earnings and EPS aren’t interchangeable terms.

As of Wednesday, 15.3% of the S&P 500’s market cap released second quarter financial results and 81% of these companies have topped their profit estimates.

Assuming S&P 500 companies beat their earnings per share expectations by 2.8%, which was the average beat rate for second quarter earnings seasons from 2010-2017, this year’s second quarter earnings per share is actually set to grow by 2.3%, according to Credit Suisse.

After all, buybacks for S&P 500 companies could top $1 trillion in 2019, according to analysis released earlier this month from Bank of America Merrill Lynch. Buybacks topped $1 trillion in 2018, as well.

Here’s a quick recap of the big earnings reports so far:

  • PepsiCo (PEP): earnings and revenue beat

  • Delta Air Lines (DAL): earnings and revenue beat

  • JPMorgan Chase (JPM): earnings and revenue beat

  • Citigroup (C): earnings and revenue beat

  • Wells Fargo (WFC): earnings and revenue beat

  • Goldman Sachs (GS): earnings and revenue beat

  • Bank of America (BAC): earnings beat, revenue match

  • CSX (CSX): earnings and revenue miss

  • UnitedHealth (UNH): earnings beat, revenue match

  • Netflix (NFLX): earnings beat, revenue miss

The market still awaits results from large-cap technology stocks including Apple (AAPL) and Microsoft (MSFT).

Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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