RE: Buybacks12 Aug 2021 08:34
"Now is probably optimal for them to buy their own stock. For example if their interest debt is 5%, and the stock value rises by 10% end of year, then they make more money- which can either reduce debt more or returned to investor."
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But doesn't it depend what they do with the buy-back shares? If the shares are cancelled then the company will see no real benefit (apart from increase in EPS & PE numbers), the asset is cancelled. The debt is still the debt....and the interest on that still has to be paid. The buy-back money will have disappeared by cancelling the shares.....similar to dividends, the money has left the company but in this case investors don't get their grubby hands on it!!