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Share buyback

A company using its cash to repurchase its own shares.

FundamentalsBeginner

Definition

Buybacks reduce the number of shares outstanding, which raises earnings per share and each remaining owner's stake. They are a way of returning cash to shareholders besides dividends.

Watch out for

Buybacks at high prices destroy value, and some buybacks only offset shares issued as employee compensation. Check whether the share count is actually falling.

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