Time to Do That BUYBACK OF SHARES
Investing in Your own stock ( NEOM ) is a Good Time & About The Cheapest Time to Do it...
With stock prices Sharply Down, a share buybacks at This Price Will looked Smart, Bullish & Positive. ..
Once stock prices Corrects or Surges, Then there Will be an Opportunity to Dilute or Resell some of those Boughtback shares back to the market to Raise Capitol to pay off Debt & Build up Cash on Hand..
Potential Positives of Share Repurchases
Here are the potential benefits of share repurchase programs:
--Shows corporate management's conviction in the company
--Reducing share count through buybacks increases earnings per share (EPS)
Increased Shareholder Value - There are many ways to value a profitable company but the most common measurement is Earnings Per Share (EPS). If earnings are flat but the number of outstanding shares decreases. . Voila! . . A magical increase in period-to-period EPS will result.
Higher Stock Prices - An increase in EPS will often alert investors that a stock is undervalued or has the potential for increasing in value. The most common result is an increase in demand and an upward movement in the price of a stock.
Increased Float - As the number of outstanding shares decreases, the shares remaining represent a larger percentage of the float. If demand increases and there is less supply, then fuel is added to a potential upward movement in the price of a stock.
Excess Cash - Companies usually buy back their stock with excess cash. If a company has excess cash, then at a minimum you can bank that it doesn't have a cash flow problem. More importantly, it signals that executives feel that cash re-invested in the corporation will get a better return than alternative investments.
Income Taxes - When excess cash is used to buyback company stock, in lieu of increasing or paying dividends, shareholders often have the opportunity to defer capital gains AND lower their tax bill if the stock price increases. Remember that dividends are taxed as ordinary income in the year they are received whereas the sale of appreciated stock is taxed when sold. Also, if the stock is held for more than one year the gain will be subject to lower capital gain rates.
Price Support - Companies with buyback programs in place use market weakness to buy back shares more aggressively during market pullbacks. This reflects confidence that a company has in itself and alerts investors that the company believes that the stock is cheap. Frequently you will see a company announce a buyback after its stock has taken a hit, which is merely an overt action to take advantage of the discount on the shares. This lends support to the price of the stock and ultimately provides security for long-term investors during rough times.
Excess Cash - Companies usually buy back their stock with excess cash. If a company has excess cash, then at a minimum you can bank that it doesn't have a cash flow problem. More importantly, it signals that executives feel that cash re-invested in the corporation will get a better return than alternative investments.
Income Taxes - When excess cash is used to buyback company stock, in lieu of increasing or paying dividends, shareholders often have the opportunity to defer capital gains AND lower their tax bill if the stock price increases. Remember that dividends are taxed as ordinary income in the year they are received whereas the sale of appreciated stock is taxed when sold. Also, if the stock is held for more than one year the gain will be subject to lower capital gain rates.
Price Support - Companies with buyback programs in place use market weakness to buy back shares more aggressively during market pullbacks. This reflects confidence that a company has in itself and alerts investors that the company believes that the stock is cheap. Frequently you will see a company announce a buyback after its stock has taken a hit, which is merely an overt action to take advantage of the discount on the shares. This lends support to the price of the stock and ultimately provides security for long-term investors during rough times.
A Stock buyback programs take advantage of supply and demand by reducing the number of shares outstanding, increasing EPS shareholder value, float and ultimately the price of stock. In addition, they are often a wise way to Later Raise Capitol....
