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This is earnings per share (EPS), not earnings. Stock buybacks lower the denominator and allow for growing EPS with stagnant earnings.
by take_a_breath 7y ago
This is earnings per share (EPS), not earnings. Stock buybacks lower the denominator and allow for growing EPS with stagnant earnings.
- sct202 7y agoYep, and corporate profits have been pretty flat since 2011 https://fred.stlouisfed.org/series/CP https://fred.stlouisfed.org/series/CP
- Ididntdothis 7y agoI never understand why earnings per share is always mentioned. Without knowing the number of shares and some math the number is totally useless. It's like saying comparing the price of a single share of two companies. It's meaningless on its own.
- smabie 7y agoWell, as an investor it’s arguably important. I care about how profitable my chunk of the company is, not how profitable the entire thing is.
- take_a_breath 7y agoThis is 100% true from an investor standpoint. The breakdown is when EPS is used as a measure of economic or corporate health.
- smabie 7y agoTotally. Price to book is a better measure in that case.
- Ididntdothis 7y agoPrice to earning ratio gives you the same information but allows you to compare companies.