RE:RE:RE:I'll be disappointedI think your focus on earnings is the right approach. I like thinking about the medium term business rather than short-term stock price. If I could own the entire company at current prices I would (Reitman family owns controlling interest). They have a monopoly on older plus size Canadian women. Satisfy their customers and the cash just keeps coming in. Annual NCIB while price below book and reasonable PE turns company into a compounding machine.
At one point stock price will reflect future earnings. I am not advocating blindly buying back stock. A Buyback has to have an advantages over dividends. That depends on stock price.
In both cases the company has to be profitable. I believe management will be focused on profitability not growth. Buyback programs send a message to fund managers that a company’s management believes its stock is trading below intrinsic value. If tangible book value is $5 per share and company can buy back stock at $2 its the equivalent of paying 40cents for a dollar.
Cheap profitable companies that have made the largest share repurchases over the prior year have gone on to outperform the market in the following year.