Stock Buybacks

Browse all terms in Glossary

Definition

Stock buybacks occur when companies buy back their own stock, removing it from the marketplace. Stock buybacks can increase the value of the remaining shares because company earnings are split among fewer shares.

Buybacks are sometimes an indication that a company perceives their stock to be undervalued, but it is up to the investor to determine if the company is correct.

Formula

Total Value of Shares Repurchased from the Marketplace.

YCharts uses "Net Total Equity Issued" from the statement of cash flows to approximate stock buybacks (multiplying by -1 since this number is negative in the case of a buyback). Hence, it includes the buyback of both common and preferred shares.

We do not show this value if the Net Total Equity Issued is positive, so only buybacks and buybacks net of issuances are shown.

Related Terms

Shareholders' Equity, Shares Outstanding, Split

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