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Goodrich Corp. Message Board

  • feather1961 feather1961 Feb 20, 2008 1:11 PM Flag

    buyback good?

    This buyback is supposed to be good news...why the pullback?

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    • Basically, creating shares just to buy them back is is like kissing your sister.

    • I will try to answer your question...

      The company stated they were repurchasing shares to offset options grants, presumably to its executives... Now, I doubt GR actually issued $600 million in equivalent options grants to its employees. However, the reason given for the buyback is not the reason the market wants to see for a buyback. The market views this as a benign buyback, because Goodrich is just masking pay increases for its employees by creating shares through options grants to buy them back. Long story short, GR is reducing the denominator by reducing the numerator in this very important metric: Earnings/Share.

      Confused yet?

      What the market wants to hear is that GR is buying back shares because they feel their stock I undervalued.

      • 1 Reply to metropick
      • I totally disagree with your reason for the buyback.......the $600 million far exceeds anything to do with stock options. Your rationale is far fetched at best. They bought back shares because this stock is undervalued and will continue year over year growth for many years. They are in a hot market and have tons of backlog.......things could not be better for GR right now. A zillion companies would like to trade positions with them.......Anything below $70 is a steal this year. Next year should see $90+.

        Companies don't buy back shares to cover stock options. Why do they need to state the obvious?