should the increase in EPS from a repurchase change the price of stock? why or why not?
2007-02-01 00:37:13 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
Yes it should as the repurchase shows the company is making more money than it needs. Also the management is not throwing the money out the window to buy other businesses just because it has the money to do so (An example of this is American Standard. It was a good kitchen and bath fixture manufacturer. Years ago they bought an auto parts business and Trane air condition and heating business. Today, I just read they are spinning off the auto business, selling their kitchen and bath fixture business and will keep the AC/Heating part and rename them self Trane. Reason - The acquisitions were a mistake, there is more value to the parts when operating separately.). Even though by buying its own shares, the value of the company stays the same (value is just changed from cash to stock) it reduces the supply/demand ratio which means higher share price.
2007-02-01 01:46:40 · answer #1 · answered by gosh137 6 · 0⤊ 0⤋
the quick answer is the fee will change immediately. it really is because fee is pushed via call for and provide, and the information statement of repurchase is sufficient to force different investors and arbitragers bid the fee up in count number of minutes if not seconds.
2016-12-03 07:47:14 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Yes, it's simple math.
price = earnings per share X multiple
If the earnings and multiple remain the same, but the number of shares decreases, then the price will go up.
2007-02-03 12:47:35 · answer #3 · answered by rklst9pitt 3 · 0⤊ 0⤋