Buyback

A buyback involves a company buying back existing shares that are traded on the exchanges. It usually done so when a company has large amounts of cash and is looking to distribute it to shareholders. Since a buyback reduces the amount of outstanding shares, it makes each share in the company more “valuable”, and also increases Earnings Per Share.

A stock buyback is a sign of confidence in the stock by the company. Though a stock buyback may also be done to negate dilution from the execution of employee stock options.