Share buybacks: Are you doing it wrong?

Share buybacks have a definite place in the public company CFOs’ arsenal for deploying capital. Returning excess cash to equity holders (the owners) of the business is one of the moves that make the most sense when higher return investments aren’t available and earnings per share could use a boost.

Less discussed is how to do it most effectively—that is, create maximum value for management and shareholders by timing the execution better.

Share buybacks achieve many aims—giving a lift to earnings per share, signaling confidence in the company’s financial health, offsetting dilution from employee stock compensation programs. Some companies also state that they’re buying back stock because their shares are undervalued.

However, many also repurchase shares at unfavorable times—in other words, when their share price is relatively high rather than low. That’s according to Fortuna Advisors, a value creation consultancy that in late April released its 2026 Buyback ROI Report.

It’s in the timing. Fortuna has two proprietary measures for buybacks. Buyback ROI is one. The other, easier to comprehend and easier for a company to improve on, is buyback effectiveness, which “measures the value attributable to optimizing the timing of repurchases.”

“Think of [buyback effectiveness] as measuring the extent to which [treasury departments] buy their stock high or low, given the long-term trajectory of their share prices,” according to the Fortuna report. By buying shares when the company’s “share price is below its long-term trendline,” it “repurchas[es] more shares per dollar of buybacks,” increasing the return on the capital it deployed.

Fortuna posits that from 2021 through 2025, “if S&P 500 companies had redistributed their actual buybacks…to repurchase the same amount at the average share price each quarter, 65% would have retired more shares. The average company would have been able to repurchase an additional 4.9% more shares, worth an additional $995 million at the end of the five-year period.”

Across the S&P 500, those additional shares “would have been worth an additional $482 billion as of the end of 2025,” Fortuna said.

Why not? So why don’t issuers pay attention to or seemingly care about the share price when they buy? Some do.

Among the companies best at this during the past few years has been Expedia, which Fortuna highlighted in its report: “Expedia Group concentrated repurchases in 2023 and 2024 as its share price struggled—and again in 2025 as short-term tariff volatility provided an opportunity to repurchase shares at an attractive valuation.” (Fortuna lists the top 10 companies with the best buyback effectiveness.)

As to why more companies don’t time their repurchases better, there are a few reasons. According to the report, “many [issuers] make the decision to buy back shares based on excess cash rather than determining whether executing at the current share price is likely to be value-accretive for shareholders.”

In addition, Michael Chew, a consultant at Fortuna Advisors, told CFO Brew that “since buybacks are distributions, there is a general lack of consideration on the strategic potential, opportunity cost, and value implications. The traditional view is that buybacks are a valve to release excess cash to keep management discipline with company capital.”

There may also be “a behavioral issue at play,” Chew said: Companies are just “less likely to deploy capital at the bottom of cycles (Think of how many investors become more risk-averse when markets go down),” he added.

How does a company improve its buyback effectiveness, assuming it wants to? Noted the Fortuna report: “Companies should have a real-time perspective on their intrinsic value per share and how that compares to market price per share—they are rarely the same.”