Per Share Values Disadvantages

Per share values are everywhere: earnings per share, dividends per share, free cash flow per share. So what’s the problem?

Buybacks are the problem

The problem is share buybacks. Most companies buy back shares above intrinsic value, destroying value over time. This increases many of the ratios investors are using, such as earnings per share (EPS) and dividends per share (DPS).

A company that profits the same amount every year but buys back 5% of its shares with it will increase EPS and DPS at a 5% CAGR. Is this…