Can anyone make this clear for me?
Let’s stay all things are the same and no dividend is given out.
Does the share price increase each year by the net cash flow per share ? (Similar to how it decreases by dividend paid per share?)
Also, by definition I assume that share buybacks are supposed to reduce the market cap. But the internet people say otherwise. According to their logic, share buybacks increase EPS which leads to an increase in share price, thus making the overall market cap the same. This logic somehow seems to be true. But the logic that the present value of the firm decreases due to decrease in cash contradicts it.
I would be grateful if someone could help me with this.