Investors love stock buybacks, but they don’t always spur the types of returns one might imagine. It takes a discerning eye to identify companies with buybacks that create significant gains for shareholders.
Buybacks, on their own, increase the value of each share. Repurchases reduce the number of shares outstanding. Keeping earnings constant, earnings per share goes up, supporting gains in the price per share. Buybacks also signal the confidence a company has in using profits and balance-sheet cash to finance these purchases.
Source: finance.yahoo.com
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