What would be effect of stock buy backs by the company on its stock price, ROE, ROC etc?


2 Answer(s)


Typically stock buybacks will increase the share price, because a company buying back shares indicates that the company is confident in its future prospects. This will drive up the stock price.

The ROC, ROE will depend on how the buyback is financed - equity or debt. If they company used its current cash then ROC, ROE will be lower. If the company borrowed money for the buyback then the ROE and ROC will be higher (assuming the stock price goes up).

A recent example the is the stock buyback that Yahoo did a few weeks back.