3 Companies Buying Back Stock—Why It Matters

March 12, 2025 at 07:15 AM EDT

Retail investors focus on who is buying certain stocks every quarter, as institutional holdings and investors are reported in that same cadence. However, there is a different way to look at buying activity, one that is much more powerful if it meets all the right criteria. This is through insider buying or corporate or management stock buyback programs.

Understanding the importance of stock buybacks, when done right, can lead investors to align with the companies that pose some of the best risk-to-reward setups and upside potential in the market. Today, there are three companies that have been buying back stock aggressively lately, and there are a few reasons why management may be choosing to do so right now, such as high profitability or discounts on fair company valuations.

Today’s list of companies buying back stock include names like Bath & Body Works Inc. (NYSE: BBWI) in the retail sector, or a stock across the board in the manufacturing sector like Steel Dynamics Inc. (NASDAQ: STLD), and even a consumer discretionary play like Royal Caribbean Cruises Ltd. (NYSE: RCL). For reasons that will become clear in just a minute, investors will see just why this insider buying activity is taking place.

Defensive Discounts Won’t Last Long

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As technology stocks in the United States have taken over the market’s attention over the past couple of years, defensive names and companies have fallen out of favor not because of their fundamentals but because of the market’s short-term nature to ignore what is not as popular with investors.

This is where savvy participants can make the most money while taking the least risk. As Bath & Body Works shares now trade at 62% of their 52-week highs, the discount due to its defensive product line might start to rotate soon, especially as volatility regimes rise for the broader S&P 500.

With this in mind, investors can look to Bath & Body Works’ management's recently approved $500 million stock buyback program, a sign of confidence from the people who know a company’s value the most after running it daily and understanding its ins and outs.

It should come as no surprise, then, to see Wall Street analysts from Citigroup place a Buy rating on Bath & Body Works stock as of February 2025, this time giving it a $48 valuation per share to call for up to 47% upside from where the stock trades today.

Insiders Are In Before the Breakout

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Investors can look at the manufacturing PMI index over the past two months and notice the first consecutive expansion readings after a 28-month contraction. If this turns out to be a new trend for the manufacturing space in the United States, then investors can make sense of the recent buybacks being implemented at Steel Dynamics.

With a program to buy back up to $1.5 billion worth of stock from insiders, investors can somewhat assume that management itself has started to bet on the view that manufacturing activity (and, therefore, steel demand) is about to break out.

Others also took this view, such as institutional buyers from Price T Rowe Associates, who decided to boost their holdings in Steel Dynamics stock by 8.7% as of February 2025, bringing their net position to a high of $642 million today, or 3.7% ownership in the company today.

With these fundamental trends growing, it also makes sense that Wall Street analysts forecast Steel Dynamics' earnings per share (EPS) to reach up to $2.33 in the second quarter of 2025, a significant boost from today’s $1.36 EPS level.

Management Commits to Rescuing Royal Caribbean Stock

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After the S&P 500 declined for all of the first week in March, discretionary names like Royal Caribbean stock took this to heart, dropping by as much as 13% during the same period. However exposed the company is to this “risk-off” attitude in the broader market, its management is still committed to showing markets how optimistic the future looks.

Companies like Royal Caribbean have cycles, and right now, it looks like the cycle is on the way down if not looking to find a bottom and rebound. While most investors would be scared to bet on a company on the way down, others will gladly take the discounts, and that’s what insiders did by approving up to $1 billion in stock buybacks for Royal Caribbean.

Analysts from Susquehanna see the same theme as insiders, who are focused on the fact that Royal Caribbean will eventually come back from the bottoming of the consumer discretionary cycle. By reiterating a Positive rating and $295 price target, these analysts are betting on a 38% rally from where the stock trades today.

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