2024-04-08 07:20:02 ET
Summary
- U.S. companies that announce share buyback programs historically outperform the market, but Chinese companies' buybacks are not as well-received.
- Alibaba's recent buyback program has not generated enthusiasm, but the reduction in shares outstanding could significantly increase EPS and dividend per share.
- China's economic recovery and Alibaba's potential for growth make it an attractive investment opportunity, despite the negative sentiment towards Chinese stocks.
In my last article on Alibaba (BABA) I had mentioned the intentionality of management to initiate a new buyback program that could support the price per share. In the last few days there has been important news in this regard, and the potential of the buyback could in my opinion permanently change sentiment toward this company. In fact, the number of shares bought back in the last quarter is the second highest ever, and both EPS and dividends will get a big boost from it. Investors cannot ignore forever a company that remunerates its shareholders in this way. In addition, the Chinese economy is gradually recovering, which could fuel Alibaba's domestic sales....
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Alibaba: Buyback Could Be A Game Changer