Since around 2020, energy midstream companies have become more aggressive with stock buybacks. VettaFi ETF Trends reported a record level of buybacks by companies in the sector in the third quarter of this year.
Buybacks reduce a company’s shares outstanding, thereby increasing earnings per share. It’s a way to drive EPS growth mechanically. Investors want to own shares of growing companies. A steadily rising EPS should lead to a higher share price.
This post originally appeared at Investors Alley.