Guides · Stocks, ETFs and markets
Share buybacks: what are they for?
In short: A company buying back its own shares reduces their number: each remaining share represents a bigger slice of the company. It is another way, besides dividends, to return money to shareholders.
The effect
Fewer shares, so higher earnings per share, which can support the price.
Good or bad idea
Useful when the stock is reasonably valued. Less so when the company buys back at very high prices or borrows to do it.
Where to see it
In results announcements, often with the size of the buyback programme.