Invest
Share Buyback – what it means and the implications
By Rainbow Coin  •  September 29, 2018
When a company initiates buyback of its own shares, the news is often received in a positive light - that the company deemed its current market share price as undervalued. Understanding the implications of share buyback of companies would help us make better investment decisions, as we seek to delve deeper behind the action and how it changes the face values of the various metrics. Does the company genuinely think that its share price is under-valued?  Does the company believe in its future earnings and growth such that it would rather invest in itself rather than invest elsewhere or pay down debts with the spare cash?  Or does the move spell alternate motives? Summary of Shares buyback implications 1) ROE (return on equity) and EPS (earning per share) are artificially inflated as outstanding shares in the market reduced. 2) ROA (return on assets) is artificially inflated because cash holding ......
Read the full article
By Rainbow Coin
I began exploring the financial world in year 2010, hoping to get out of the rat race and be financially independent. 2010 was the aftermath period of the Lehman crisis when a pretty shaken up market was struggling to recover. On hindsight, that was the perfect time to catch multi-bagger stocks should I be a veteran or at least had some basic knowledge of picking up 'gems'. My learning curve was steep then, as I have absolutely no friends or relative who could shed some light on what's investing about.
LEAVE A COMMENT
LEAVE A COMMENT

Your email address will not be published.

*

Your Email Address will not be published
*

Read More Articles
More from thefinance