Even for companies that do not pay dividends, buybacks should increase the value of each share, because you share profits with fewer other shareholders.

Buybacks raise the EPS/earning-per-share by lowering the denominator (number of outstanding shares).

EDIT:

If P/E stays the same, but the E (earnings) grows, the P (price) has to grow too.

I think it’s quite uncontroversial to equate buybacks with dividends. Personally, I prefer dividends, even if they’re suboptimal tax-wise.