Adding Value by Stock Repurchase

Implications: - Applied Material has been repurchasing its own stock in tune of $2.5B recently and another $2.5B in the past fiscal quarter
- Their board has approved another stock buy back of up to $5B.
- Applied and Cigna are only 2 of most recent companies buying back their own stock recently 

Analysis: In spite of shelling out over $5B in one quarter, Applied Material still has over $2.8B of cash on its balance sheet.  Given the current state of semiconductor industry, it does not seem that spending the cash on R&D or M&A activity add much value to the share holder.  So by buying back stocks, Applied is trying to return some of its cash to its shareholders, although a one time dividend would have been a better use of cash.

The stock is currently valued at 21.3 times trailing earnings.  As such, it may not be grossly overvalued.  But In my humble opinion, buying back stock is much more responsible than engaging in a unsuitable M&A.