Share buyback
Company purchases of its own shares, retired or held as treasury stock. Returns capital to remaining shareholders by reducing share count.
Net buyback yield = Shares repurchased net of issuance / Market capA share buyback is a company purchase of its own outstanding shares. Repurchased shares are either retired (extinguished entirely) or held as treasury stock (still outstanding for legal purposes but excluded from EPS and dividends). The economic effect is to return capital to the remaining shareholders by reducing the share count, mechanically increasing per-share metrics. Buybacks are functionally a tax-efficient alternative to dividends — they return capital without the income-tax hit that dividends suffer in many jurisdictions — but they only create value if shares are repurchased below intrinsic value. A company buying back shares aggressively at premium multiples is destroying value, even though headline EPS rises. We track net buyback yield (shares retired net of new issuance, divided by market cap) and compare it to dividend yield to construct a total payout yield. We also watch the trend in buybacks relative to free cash flow: a buyback program funded by debt issuance during peak earnings is the classic late-cycle pattern that often precedes painful capital-allocation reversals.