Investors should be wary of stock buybacks during down times because the resulting decrease in shares and increase in earnings per share can be used to mask a slowdown in earnings growth.

Question

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During down times, companies may use stock buybacks to artificially increase earnings per share and mask a decline in earnings growth. Investors should be cautious of this and look at other financial indicators before making investment decisions.

Investors Should Be Wary of Stock Buybacks During Down Times