Potential Pitfalls
Manipulation of Earnings - Above we described how a buyback improves the earnings per share number. Analysts rate stocks on many factors, but one of the most important numbers is the Earnings Per Share. Assume that an analyst estimates earnings using a higher number of outstanding shares existing before a buyback is executed. If the timing is right, companies could buyback shares and appear to beat consensus estimates that were based on a larger number of outstanding shares. So, watch out for announcements just prior to earnings.
Buyback Percentage - The higher the percentage of the buyback, the greater the potential for profits. Unfortunately, the buyback percentage is not typically part of an announcement so in order to determine if there is any significance to the announcement you'll need to do some research. Don't assume that a large number of shares is necessarily a large percentage.
Execution of Buyback - There is a difference between announcing a buyback and actually purchasing the stock. A buyback announcement may initially boost the price of a stock, but this phenomenon (when it occurs) is usually short lived. Don't be fooled into believing that all announcements are implemented. A good portion of announced buybacks are not executed in full.
High Stock Prices - Beware of a buyback program announced when a stock is at or nearing an all-time high. A stock buyback can be used to manipulate less than desirable EPS expectations. One way of investigating this is to compare the P/E (Price/Earnings) ratio relative to other stocks in the sector or industry. If a higher than normal P/E ratio exists, then it doesn't make a whole lot of sense for a company to buy it's stock at a premium unless there is something in the works that will add substantially to earnings.
ช่วงนี้มีหุ้นหลายตัวที่เอาวิธีการซื้อหุ้นคืนมาสร้างราคาหุ้น
ข้อผิดพลาดที่พึงระวัง สำหรับหุ้นที่จะมีการซื้อคืน (Stock Buyback)
Manipulation of Earnings - Above we described how a buyback improves the earnings per share number. Analysts rate stocks on many factors, but one of the most important numbers is the Earnings Per Share. Assume that an analyst estimates earnings using a higher number of outstanding shares existing before a buyback is executed. If the timing is right, companies could buyback shares and appear to beat consensus estimates that were based on a larger number of outstanding shares. So, watch out for announcements just prior to earnings.
Buyback Percentage - The higher the percentage of the buyback, the greater the potential for profits. Unfortunately, the buyback percentage is not typically part of an announcement so in order to determine if there is any significance to the announcement you'll need to do some research. Don't assume that a large number of shares is necessarily a large percentage.
Execution of Buyback - There is a difference between announcing a buyback and actually purchasing the stock. A buyback announcement may initially boost the price of a stock, but this phenomenon (when it occurs) is usually short lived. Don't be fooled into believing that all announcements are implemented. A good portion of announced buybacks are not executed in full.
High Stock Prices - Beware of a buyback program announced when a stock is at or nearing an all-time high. A stock buyback can be used to manipulate less than desirable EPS expectations. One way of investigating this is to compare the P/E (Price/Earnings) ratio relative to other stocks in the sector or industry. If a higher than normal P/E ratio exists, then it doesn't make a whole lot of sense for a company to buy it's stock at a premium unless there is something in the works that will add substantially to earnings.
ช่วงนี้มีหุ้นหลายตัวที่เอาวิธีการซื้อหุ้นคืนมาสร้างราคาหุ้น