What to think of the new share buy back program of The Coca Cola Company?

A new share buy back program from The Coca Cola Company.

Last week The Coca Cola Company announced the start of a new share buy back program (150M common shares). The program will take effect at the conclusion of the company’s current program.





Share Buy back Program

Share repurchases are subject to the company’s discretion based on various factors. In addition, the board of directors may modify, extend or terminate the program at any time.

The company’s current share repurchase program for 500 million shares was announced in October 2012. The company’s initial share repurchase program began in 1984.

At this moment The Coca Cola Company has a total amount of 4,305M shares outstanding. Thus this buy back program is almost 3.5% of the current outstanding shares.

I like these kinds of programs and I think these are a good thing for shareholders. However in the case of KO, I didn’t find any official reason for this share buy back program. I’ve only found that The Coca Cola Company uses this Repurchase Program in relation to its employee stock options exercises. Mmm… if this is only the case, I’m not so thrilled with this share buy back program.

If I take a look at the history of the number of outstanding shares for the Coca Cola Company, I see a small decline in the total numbers of shares (less than 1% every year since 2014). So some mixed feeling over here about this share repurchase program.



By buying back shares the company is effectively reducing its outstanding shares on the market. And if there are fewer shares outstanding the EPS (Earning Per Share) will be affected by this action. Normally when a company announces a share buyback, investors get excited and the share price will also go up.

However in the case of The Coca Cola Company, I have some mixed feelings about it. I wish they would reduce the number of share outstanding much faster.

If you want to know more about my opinion on share buy backs, read my Ahold post.

What do you think of the new share buy back program? Do you have shares of KO? I like to hear from you.



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