Share repurchases, also known as share buybacks or stock buybacks, are a way for companies, here are some things to know.
1
A share repurchase involves a publicly traded company buying back its shares from the market.
2
Share repurchases act as an alternative method, alongside dividends, for companies to distribute cash to shareholders.
3
Repurchases often indicate management's belief that the stock is undervalued and the company has strong prospects.
4
By reducing the number of outstanding shares, repurchases can potentially increase the price per share.
5
Buybacks can improve certain financial ratios, such as earnings per share, which can be attractive to investors.
6
Companies may use repurchases to stop a declining stock price, increase their ownership stake, or for other strategic reasons.
7
Share repurchases can be tax-efficient for some investors compared to dividends.