Definition of Share repurchase:
Buying of its own shares from the public by a firm whose management believes the shares are undervalued. Its objective is to increase the market value of the shares by reducing their number available for purchase.
A share repurchase is a transaction whereby a company buys back its own shares from the marketplace. A company might buy back its shares because management considers them undervalued. The company buys shares directly from the market or offers its shareholders the option of tendering their shares directly to the company at a fixed price. Also known as a share buyback, this action reduces the number of outstanding shares, which increases both the demand for the shares and the price.
Because a share repurchase reduces the number of shares outstanding, it increases earnings per share (EPS). A higher EPS elevates the market value of the remaining shares. After repurchase, the shares are canceled or held as treasury shares, so they are no longer held publicly and are not outstanding.
How to use Share repurchase in a sentence?
- A company might buy back its shares to boost the value of the stock and to improve the financial statements.
- There is a risk that the stock price could fall after a share repurchase.
- A share repurchase, or buyback, is a decision by a company to buy back its own shares from the marketplace.
- Companies tend to repurchase shares when they have cash on hand and the stock market is on an upswing.
Meaning of Share repurchase & Share repurchase Definition