Buyback
When a company repurchases its own shares from the open market, reducing shares outstanding. Mechanically increases EPS (same profit, fewer shares) and returns cash to shareholders without triggering dividend taxation. The economic value depends entirely on price: buybacks at a discount to intrinsic value transfer wealth to remaining holders; buybacks above intrinsic value destroy it. Watch for buybacks funded by debt (raises EPS via leverage, not value) and buybacks that just offset stock-based compensation issuance (no net share reduction).
Lessons that use this term
Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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