foxex: What Is a 'Buyback'?

Wednesday, March 25, 2020

What Is a 'Buyback'?

A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

Related to "Buyback"

Stock Buybacks: A Breakdown

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Dividend vs. Buyback: What's the Difference?

Companies reward their shareholders by paying dividends or buying back shares. Learn which action is better for investors.

Why Would a Company Buy Back Its Own Shares?

Learn about share buybacks and the reasons a company might choose to repurchase its own stock, including ownership consolidation and stock valuation.

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Related Definitions

Tender Offer

A tender offer is an offer to purchase some or all of shareholders' shares in a corporation.

Buyback Ratio

A buyback ratio is the amount of cash paid by a company for buying back its shares over the past year, divided by its market cap at the beginning of the period.

Basic Earnings Per Share

Basic earnings per share (EPS) tells investors how much of a firm's net income was allotted to each share of common stock.

Price-to-Earnings Ratio

The price-to-earnings ratio (P/E ratio) is defined as a ratio for valuing a company that measures its current share price relative to its per-share earnings.