Forgot your password?
New user?
Views
- State: Published
Document Actions
Share Buyback may give a lift to Great American Financial Resources (GFR) 04/29/2005
Great American is buying back around 3.5% of its stock. GFR is a subsidiary of American Financial Group, Inc. First-quarter earnings, announced April 23, increased nearly 5 percent year-over-year on improved results across all business lines.
The Graham Investor likes to see companies increasing earnings and
buying back their stock. Stock buybacks or repurchases are a handy way
for companies to use excess cash if they do not need to (or cannot)
reinvest it in the business. There are several reasons why the company
might carry out a buyback exercise: the most obvious one is that they
think their stock is good value. Looking at GFR's chart, the recent
results, and the P/CFO value, The Graham Investor is inclined to
believe that this may well be the case. The price seems stagnant
and depressed, but it may be that GFR's business is actually doing a
lot better than the price reflects.
For long-term investors, a stock buyback can be better than an additional dividend if it improves the share price over time, because long-term capital gains are taxed less than dividend income.
Looking at the chart, we could expect a return to $17.00 to $17.50 in the near term. Above $17.50, a new uptrend would be in place. Failing that, strong support seems to come in at just below $15.00 where the stock would be great value for anyone accumulating it for their portfolio.
For long-term investors, a stock buyback can be better than an additional dividend if it improves the share price over time, because long-term capital gains are taxed less than dividend income.
Looking at the chart, we could expect a return to $17.00 to $17.50 in the near term. Above $17.50, a new uptrend would be in place. Failing that, strong support seems to come in at just below $15.00 where the stock would be great value for anyone accumulating it for their portfolio.