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Glossary
Income

Share buyback

The company buying its own shares and cancelling them.

With fewer shares outstanding, each remaining share owns a larger slice of the same business, so earnings per share rise even if total profit does not. It is a dividend in disguise, and often a more tax-efficient one.

Its virtue depends entirely on price. Buying back shares below intrinsic value transfers wealth to continuing shareholders. Buying them back above it destroys wealth, and companies have a marked tendency to buy most enthusiastically at the top.

Figure

What you actually own

Founders50%
Institutions30%
Other investors15%
You5%

A share is a slice of the whole company: its profits, its assets and its votes. Your slice is small, and it is a real claim, not a bet on a ticker.

Why it matters

It is one of the largest uses of corporate cash, and one of the most frequently misjudged.

The mistake everyone makes

Cheering any buyback. Ask what the company paid, and whether it also issued shares to staff at the same time, which quietly cancels the effect.

Related terms

Dilution
Your slice shrinking because the company issued more shares.
EPS
Net profit divided by the number of shares, which is your slice of it.
Free cash flow
The cash actually left over after the business has paid to keep itself alive.

See Share buyback on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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