Issuance or Retirement of Stock

The Issuance (Retirement) of Stock show if the company has either sold more or bought back shares of stock. If the company has sold more shares of stock, the number of outstanding shares get diluted and the earning per share is reduced. If the company has bought back shares of stock, the number of outstanding shares is reduced and the earnings per share increases.

A positive value for this line entry means the company had a cash inflow because of the sale of more stock. A negative value means the company had a cash outflow because they bought their own stock. A negative number for the Issuance (Retirement) of Stock is a very good thing. It increases shareholder value. Add up the numbers for the past several years and if the total is negative that means the company has bought back more shares than it has sold.

 

Equations

 

Add all the values for the previous years and see if you get a negative number:

Issuance (Retirement) of Stock

 

Example 1

Company: American Express
Date: May 2014

Issuance (Retirement) of Stock for American Express
Source: Google Finance

 

American Express bought back $8.4 Billion worth of their shares. The company has increased their shareholders' Earnings Per Share.

Year Issuance (Retirement) of Stock (Millions)
2013 -3,222
2012 -3,509
2011 -1,706
2010 73
Total -8,364

 

Example 2

Company: IBM
Date: May 2014

Issuance (Retirement) of Stock for IBM
Source: Google Finance

 

IBM has bought back $47.4 Billion dollars worth of shares which is a phenomenally huge amount. They have increased shareholder value dramatically.

Year Issuance (Retirement) of Stock (Millions)
2013 -12,785
2012 -10,455
2011 -12,593
2010 -11,601
Total -47,437

 

Example 3

Company: Ford Motors
Date: May 2014

Issuance (Retirement) of Stock for Ford Motors
Source: Google Finance

 

Ford has issued more shares over the last 4 years diluting their shareholders.

Year Issuance (Retirement) of Stock (Millions)
2013 -213
2012 -125
2011 0
2010 1,339
Total 1,001

 

My Financial Analysis of Stocks

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