It wasn’t earnings growth.
Third quarter 2019 earnings for the companies of the S&P 500 were about 4% lower than they were a year ago. Of course, if we look at earnings per share, the decline was only around 2%.
Why the difference? It’s because a company’s share buyback activity lowers the number of shares out there. The smaller divisor makes for a bigger per-share earnings number…A lot of people will tell you that share buybacks are a terrible use of corporate cash — that the money should be reinvested in the company, that it should be used to pay employees […]
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