FRANKFURT (dpa-AFX) - A "new era in the use of funds" at RWE was handsomely rewarded on the stock market on Wednesday. Goldman Sachs expert Alberto Gandolfi cited the buyback of own shares with a volume of 1.5 billion euros announced by the utility in the quarterly report.

As a result, the shares of the utility climbed by almost 9 percent to 32.81 euros. Their loss for the year narrowed to around 20 percent, almost leaving the phalanx of the ten weakest DAX stocks in 2024. Just a week ago, the discount was over 31% before a recovery set in, which has now gathered momentum.

The buyback program could be an initial concession to activist investor Elliott. The Bloomberg news agency had reported in the previous week, citing well-informed persons, that he had built up a considerable stake in the German utility and was demanding this step.

Analyst Gandolfi sees the move as being in line with a "shareholder-friendly" capital allocation that he had recently discussed. This is because the buybacks would be financed by reducing the investment budget. Gandolfi sees the return on the buyback in the mid-ten percent range, while the company is only aiming for a profitability of around eight percent from the operating business. The eighteen-month program will act as a bridge until RWE's earnings development really takes off, he said./ag/ajx