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Zacks Investment Ideas feature highlights: Chevron, Meta Platforms and United Parcel Service

For Immediate Release

Chicago, IL – March 1, 2023 – Today, Zacks Investment Ideas feature highlights Chevron CVX, Meta Platforms META and United Parcel Service UPS.

Buyback Bonanza: 3 Companies Loading Up on Shares

Stock buybacks, also known as share repurchase programs, have recently been a hot conversation topic in the market.

Many have criticized the practice, while others have pushed back against the critics.

In fact, buybacks totaled a whopping $930 billion in 2022.

There are several reasons companies elect to buy back their stock; they’ve decided to utilize excess cash, they want to limit dilution caused by employee stock option programs, or simply because they believe their shares are undervalued.

Nonetheless, some companies, including Chevron, Meta Platforms and United Parcel Service, have unveiled sizable repurchase programs in 2023.

Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.

With them scooping up so many shares, it raises a valid question – how do the companies currently stack up? Let’s take a closer look at the announcements and a few other aspects.

United Parcel Service

United Parcel Service is the world’s largest express carrier and package delivery provider. The company unveiled a new $5 billion share repurchase program in its latest quarterly release back on January 31st.

The quarterly results delivered were mixed, with the company exceeding the Zacks Consensus EPS Estimate modestly but falling short of revenue expectations by 3%. Below is a chart illustrating the company’s revenue on a quarterly basis.

In addition, UPS upped its quarterly dividend to $1.62 per share, payable on March 10th, 2023. Impressively, it represented the company’s 14th consecutive year of increased quarterly payouts.

Chevron

Earlier in the year, Chevron unveiled a massive $75 billion share buyback program. And recently, in the company’s annual shareholder meeting, CVX raised its buyback guidance to $10 – $20 billion per year.

Pierre Breber, CFO, said, “We’re winning back investors with consistent and growing cash returned to shareholders across the commodity price cycle.”

The surge in energy prices has undoubtedly helped the company’s cash-generating abilities; CVX reported free cash flow of $8.6 billion in its latest release, growing nearly 30% year-over-year.

CVX’s free cash flow has recovered nicely from pandemic lows in June of 2020.

Meta Platforms

The market was impressed with META’s latest quarterly report in early February, with the tech giant announcing a $40 billion share buyback program.

The company exceeded the Zacks Consensus EPS Estimate by more than 40% and posted revenue nearly 3% ahead of expectations. Shares soared following the release.

Following a challenging 2022, META shares aren’t nearly as expensive; the company’s shares presently trade at a 17.6X forward earnings multiple, well beneath the 23.4X five-year median and Zacks Computer and Technology sector average.

And to top it off, Meta Platforms’ earnings outlook has drifted higher across all timeframes over the last several months, pushing the stock into a Zacks Rank #2 (Buy).

Bottom Line

The primary focus surrounding the negativity of buybacks undoubtedly stems from comments said by president Joe Biden in his State of the Union address. So far, many have doubted the 1% buyback tax passed by congress just last year.

Still, while many have voiced concerns over buybacks, some companies, including Chevron, Meta Platforms, and United Parcel Service, have all unveiled sizable repurchase programs in 2023.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Chevron Corporation (CVX) : Free Stock Analysis Report

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