not just the stock, either...even when they were doing reasonably well in the mid-2010s, a stunning percentage of their long-term EPS growth came from buybacks.
These numbers are from a piece I wrote back in 2015:
2004: net income of $1.15B, EPS of $1.21 (991M shares)
2014: net income of $1.26B, EPS of $2.87 (440M shares)
So net income compounded at <1%, annually, EPS at 9%. Pretty amazing.
now...I'm pretty pro-buyback, even in this case, for two reasons.
First, Gap shareholders can't complain about the buybacks, bc they were happy to own the stock at the same price those buybacks were made.
Second, those shareholders could have converted the repurchases into dividends (which aren't included in the Empire chart, btw). You simply sell a portion of the stake equal to the buyback amount and you have the same percentage ownership in the company plus cash.
One thing I like to say is that a stock repurchase simply is a dividend with the default reinvestment option on, instead of off. Still applies here.
Related to Gap, this blew my mind https://empirefinancialresearch.com/articles/gaps-value-destroying-share-repurchases-truth-social-faces-financial-peril-as-worry-about-trumps-future-grows-my-dads-upcoming-heart-procedure-possibly-due-to-long-covid
I knew the stock had done badly but didn't realize it was this bad. Surprising indeed.
not just the stock, either...even when they were doing reasonably well in the mid-2010s, a stunning percentage of their long-term EPS growth came from buybacks.
These numbers are from a piece I wrote back in 2015:
2004: net income of $1.15B, EPS of $1.21 (991M shares)
2014: net income of $1.26B, EPS of $2.87 (440M shares)
So net income compounded at <1%, annually, EPS at 9%. Pretty amazing.
now...I'm pretty pro-buyback, even in this case, for two reasons.
First, Gap shareholders can't complain about the buybacks, bc they were happy to own the stock at the same price those buybacks were made.
Second, those shareholders could have converted the repurchases into dividends (which aren't included in the Empire chart, btw). You simply sell a portion of the stake equal to the buyback amount and you have the same percentage ownership in the company plus cash.
One thing I like to say is that a stock repurchase simply is a dividend with the default reinvestment option on, instead of off. Still applies here.
I’ve never considered that or heard of a buyback being described like that before. But it makes total sense!