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Is management buyback at undervalued prices?

Questions › Category: Management Quadrant › Is management buyback at undervalued prices?
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Jet asked 5 years ago

Hi TFP,
How do we know whether the management of the company is paying reasonable or good prices to do share buyback? For eg Starbucks, they have a share buyback plan to buy xx amount of shares over xx period. but they have their own means of valuing their own stock worth. To me may be overvalued, but to them may be undervalued.
Thanks in advance!

1 Answers
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Victor Chng answered 5 years ago

Hi Jet,
 
when I gauge management buyback of share is based on my own valuation method. If they buyback at the price that my valuation say it is undervalue than the management did a good job for it. 

Isabel Im replied 5 years ago

That is to say that ‘company buying back’ their shares is not an indicator of worthiness?

Victor Chng replied 5 years ago

Yes company buyback share does not means the share is undervalued. It still boils down to you as an investor to gauge whether it is undervalue.