• Kurtis Hemmerling

    I too think that buybacks are a double-edged sword. Yes, it shows some confidence by management and creates shareholder value. But it also artificially boosts earnings for a very short time as you are comparing EPS when there were more shares vs. fewer shares. The total net income can remain static but the growth rate will appear to jump between the two quarters on a per share basis. I have to watch for this when screening for growth on value stocks. But to be fair, I like buybacks a whole lot more than share dilution.

  • http://cebviews.com Matt M.

    As the economy begins to rebound, firms find themselves with more and more extra cash on hand. Conventional wisdom tells them to return it to the shareholders via dividends and share buybacks. We would NOT advise this; our research shows that returning cash to shareholders does not reap the rewards it should, and that firms are better off using the cash for long-term capital investments.

  • http://www.bargainbininvesting.com/ Bargain Bin

    Buying back shares when the price is too high is just like throwing money away. Share repurchases are only good if the stock is trading below intrinsic value, otherwise a dividend is by far the better choice. Here’s an example of the problems with share buybacks.

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