Traders' Insight: A Santa Claus Rally in Buybacks? A Record Year Shaping Up.

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  • This earnings season has seen its share of volatility amid macro uncertainty, yet companies continue to engage in and authorize share repurchase programs
  • Last year was a record in total dollars used to buy back stock, but 2022 looks to take the top spot ahead of the new 1% buyback excise tax starting in January
  • With the buyback blackout period ending for many major companies, will the stage be set for a big late-year rally?

If in doubt, authorize a share repurchase program. That has been a mantra this earnings season as results come in mixed. The beat rate has been decent thus far, but third-quarter earnings estimates have come down significantly from where they were on June 30 and even as recently as the end of September. FactSet notes that the EPS growth rate at end of Q2 was 9.8% for this reporting period. Today, though, the blended aggregate profit growth rate looks to be in the low single digits using actual numbers reported and estimated per-share profits to come. No surprise, there has been a slew of bearish pre-announcements over the last several months as firms attempted to temper expectations.

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