Share buyback
A company repurchasing its own shares, reducing the share count and often returning cash to shareholders.
A share buyback, or repurchase, is when a company buys its own shares in the market or through a tender offer. It reduces the number of shares outstanding, which can raise earnings per share even if net income is unchanged. Buybacks are authorized by the board, often with a dollar amount and time frame.
On our site, buyback authorizations and executed repurchases appear in the company's filings. An authorization is not a commitment to spend the full amount.
Traders care because buybacks use free cash flow and create demand for the stock. A large buyback funded with debt raises a different question.
Worked example (illustrative numbers, not real data): a company with 100 million shares and net income of 200 million has EPS of 2.00. It buys back 5 million shares. With net income unchanged, the share count falls to 95 million and EPS rises to about 2.11, a 5.3 percent increase without any growth in earnings.