He says this can be OK, provided the company has (1) modest or no net debt, (2) persistent and rising levels of free cash flow, and (3)
stock buybacks at a discount to intrinsic value.
The impact of a $ 2M
stock buyback at Friday's closing price is to increase per share liquidation value by around 6 % to $ 1.64 and leaves the company with $ 26.3 M in cash and short term investments.
Not exact matches
«On the capital front, we're also in the middle of a (
stock)
buyback program that's going
at an accelerated pace.
With
stocks in general still trading so high, investors are best off ignoring the short - term hype around
buyback announcements and instead taking a closer look
at companies on repurchasing binges to see if their share prices have more room to run.
Companies in the S&P 500 are on track to give investors more than $ 1 trillion in
stock buybacks and dividend increases this year, according to Howard Silverblatt, a senior analyst
at S&P Dow...
«But if you look
at hundreds of examples, you find that
stock buybacks do increase long - term value.»
Investors should want companies to reinvest in themselves and their employees versus repurchasing their own
stock to increase the share price, said William Lazonick, an economics professor
at the University of Massachusetts, Lowell, who studies
stock buybacks.
Apple's
stock buyback program isn't just bigger than those of other companies, it's also better
at doing what investors want share repurchases to do.
At such a cheap valuation, VIAB can use its $ 3 billion in annual free cash flow to buyback stock, retiring shares at a undervalued price, thereby increasing the overall value for remaining shareholder
At such a cheap valuation, VIAB can use its $ 3 billion in annual free cash flow to
buyback stock, retiring shares
at a undervalued price, thereby increasing the overall value for remaining shareholder
at a undervalued price, thereby increasing the overall value for remaining shareholders.
At current prices, the 250 million share
buyback authorization would represent $ 13.2 billion and through 3Q15, Wells Fargo has repurchased $ 6.7 billion of common
stock, which represents 2.5 % of WFC's market cap.
Despite some investors waxing rhapsodic about things like «mass collaboration and sharing enabled by technology and global communications networks,» S&P 500 Index revenues have grown
at a nominal rate of just 3.2 % annually over the past 20 years, and just 1.6 % annually over the past decade, and that includes the benefit of
stock buybacks.
The company traditionally makes a dividend increase announcement
at this time of year, and some believe that some of the billions in repatriated cash could go back to investors in the form of dividends or
stock buybacks.
«I'm amazed
at how many CFOs don't truly understand the long - term sustainability and value creation of
stock buybacks.»
«I would hope that with their big advantage of bringing money home
at a very low rate that they would invest in infrastructure and things, but our experience has been that they will do dividends, they will do
stock buybacks, and things like that,» she said.
«
Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle - class employment opportunities,» William Lazonick, a professor
at the University of Massachusetts Lowell, recently told CNN Money.
As long as companies see their valuations
at elevated levels,
stock buybacks should not increase.
In recent years, however, we have increasingly seen debt used for
stock buybacks and dividends, as the chart below shows, in essence rewarding equity - holders
at the (possible) expense of bondholders.
«Although
buybacks do not represent an optimal use of cash
at the current time, they will be positive for near - term
stock performance,» the note said.
I agree that
buybacks at a high valuation are likely foolish, but increasing the attractiveness of the
stock to those focused on the immediate payback would seem to make acquiring more shares
at a good price more difficult.
But the interesting thing is that in the eyes of many investors, Apple's quarterly iPhone sales numbers seem to matter less now than they have for years —
at least relative to how much cash Apple is generating and returning to shareholders through dividends and
stock buybacks.
Schumer read aloud quotes from CEOs saying they would plow corporate tax cuts into
stock buybacks and other such expenditures aimed
at increasing the value of shares (and potentially CEO bonuses), with no mention of jobs.
Or,
at least, it did until Harry Wilson got his Wall Street cronies to force GM into a $ 5 billion
stock buyback.
* Waikem Certified * AutoCheck
BuyBack Protection * Transparent Pricing * Easy and Simple Car Buying * Stark Counties Largest Used Car Dealer * Over 350 Pre-Owned Vehicles In
Stock Located
at: George Waikem Ford, Inc. 4321 Lincoln Way East Massillon, OH 44646
F Waikem Certified * AutoCheck
BuyBack Protection * Transparent Pricing * Easy and Simple Car Buying * Stark Counties Largest Used Car Dealer * Over 350 Pre-Owned Vehicles In
Stock Located
at: George Waikem Ford, Inc. 4321 Lincoln Way East Massillon, OH 44646
CARFAX 1 owner and
buyback guarantee ** Safety equipment includes: ABS, Traction control, Curtain airbags... Other features include: Leather seats, Bluetooth, Power locks, Power windows, Heated seats... A quality vehicle
at a quality price is what we strive to achieve... * Please note that when we have not yet photographed a particular vehicle,
stock photos are provided as model representation only and not all options shown may be equipped.
The management has wisely bought back shares of the
stock at severely depressed levels, and doesn't seem to get too carried away with regular
buybacks, preferring to return excess cash to shareholders in the form of special dividends (much preferred to
buybacks).
Even with all the
buybacks and LBOs, it isn't normal for
stocks and bonds to trade in a tight correlated way in the short run, so, take one of your eyes off of bonds, and look
at the fundamentals of the companies that you own.
However, the average timing of
buybacks have been awful (look
at the amount of
stock bought back in 2007 and how little was bought back in 2009).
It seems the average manager prefers to goose an already overvalued
stock with a
buyback at shareholder's cost.
In his book What Works on Wall Street, he looked
at the efficacy of using
buyback yield, the percentage of shares a company redeemed over the last year, to pick
stocks.
All
stocks are held in the expectation that they will eventually return money to whoever is holding the shares
at the time, by one or more of the following mechanisms: Paying dividends Share
buybacks, where the company buys out some of its own shares (in some ways this is quite similar to paying a dividend, but often has different tax implications) A...
If you recommend individual
stocks for your clients, or advise them about existing
stock holdings, you should take a close look
at a company's
buyback program.
The simple answer in my opinion is lack of alternatives, especially for long - term investors such as endowment and pension funds, which has created a surge in demand for
stocks at the same time that the supply of
stocks is dwindling due to the aggressive
buyback programs instituted by corporations in recent years.
The companies that actually do
buybacks, as opposed to merely announcing them, do very well, and that is intensified for those that buy back
stock at high free cash flow yields.
For mature, going concerns, the after - tax operating income and free cash flow to the firm will be positive (
at least on average) and that cash flow is used to service debt payments as well as to provide cash flows to equity in the form of dividends and
stock buybacks.
[Just look
at the amazing run on Autozone (AZO: US)-- yes, they've had great execution, but much of its performance is down to aggressive / sustained
stock buybacks].
Looking
at listed companies in the US now, following the rise in equity valuations and borrowing for
buybacks, it would be hard to characterize the average
stock as undervalued, or cash rich.
This presents a real problem, if you don't
at least venture to determine an Intrinsic Value for your
stock, you have no way of figuring out if a share
buyback is
at a discount and adding true economic value for your shareholders.
Although the company has indicated it will undertake a $ 5M
stock buyback, which will likely push the
stock price up further, the
stock has reached our estimate of its liquidation value, so the
buyback will not increase the per share liquidation value
at this level.
Dividend payments are the traditional avenue for income investors, buy
stock buybacks have been attracting investors
at a higher rate in the last year.
Usually
buybacks are done because management is flush with cash, and that unfortunately happens when a company's
stock is already greatly «appreciated» on Wall Street, i.e. trading
at a significant premium to book.
If the
buyback had been completed
at the current
stock price, the company's per share liquidation value would have increased by around 17 % to $ 6.72.
In 2012, Buffett issued a share
buyback of Berkshire Hathaway
stock at 116 % of current book value.
From 2005 - 2008, IMN spent nearly $ 190MM to
buyback shares when its
stock was valued
at levels ranging from 0.4 - 1.1 x P / S and 0.8 - 1.6 x P / B or $ 14 - $ 48 per share.
A study of analyst recommendations
at the major brokerages shows that Monster Beverage Corp is the # 43 broker analyst pick among those
stocks screened by The Online Investor for strong
stock buyback activity.
A study of analyst recommendations
at the major brokerages shows that General Motors Co is the # 32 broker analyst pick among those
stocks screened by The Online Investor for strong
stock buyback activity.