’Tis the season for companies to lay off workers and buy back shares

Dow Chemical, 3M and other companies ought to spend money on boosting sales instead of share repurchases

What do you make of a company that announces restructuring moves that include possible job cuts while it buys back shares?

For starters, if a company whose stock you own continues to boost (or mitigate the decline of) earnings per share (EPS) by buying back shares, while not increasing sales, chances are the buybacks aren’t helping. The stock has probably been declining in value, and EPS may not be growing. Maybe the buybacks aren’t reducing the diluted share count by much because so many new shares are being handed to executives.

That is why it’s a good idea to pay attention to companies’ quarterly earnings announcements, despite unctuous executives’ insistence on using so much boiler-plate language when communicating with their companies’ owners.  Read more