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Mix-Ansicht- Stock Buybacks - With What? - Cosa, 25.07.2002, 10:56
- Re: Stock Buybacks - With What? - leibovitz, 25.07.2002, 11:06
- Re: Stock Buybacks - With What? - Emerald, 25.07.2002, 11:19
Stock Buybacks - With What?
Moin,
<font size="4">Stock Buybacks - With What?</font>
July 23, 2002
Today's papers were filled with stories that corporations were coming to the aid of their stocks with buybacks. How are corporations going to finance these buybacks? Chart 1 shows that as of the first quarter of this year, nonfinancial corporations were sporting the highest debt-to-asset ratios in the postwar period. And, correctly if I'm wrong, but investors and ratings agencies are penalizing Corporate America these days for its high leverage. So, are corporations going to borrow more to buyback their stock? If they don't borrow, are they going to use profits to repurchase shares? If so, does this not imply less left over to purchase productivity-enhancing equipment? And, if purchases of productivity-enhancing equipment remain low, does this not have negative implications for profit growth going forward? So, although some companies may have the luxury of low leverage ratios to enable them to buyback their stock, most do not. Therefore, I wouldn't count on stock buybacks to start a bull market in the Wilshire 5000.
Chart 1
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Paul Kasriel
Director of Economic Research
Quelle: Northerntrust
Gruss
Cosa
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