0

Is EPS still trustworthy if a company can influence EPS via share buy back or share split?

1 Answer 1

2

Companies can "manipulate" EPS in a variety of ways. That does not make it untrustworthy, it just means that you can't use it as the sole measure of a company's performance, and have to look for things that do manipulate it, like buybacks, write-offs, etc.

No one measure can be taken in a vacuum. You must look at other metrics to get a complete picture of the company. For example, EPS may be improved via buybacks, but things like cash flow would be negatively affected, which could be a red flag. It also does not affect operations metrics like profit margins, which are more important for looking at future performance.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .