What Is the Financial Effect of a Stock Buyback on Earnings per Share (EPS)? ▴ Learn

What Is the Financial Effect of a Stock Buyback on Earnings per Share (EPS)?

A stock buyback reduces the number of outstanding shares. Since Earnings Per Share (EPS) is calculated as a company's net income divided by the number of outstanding shares, reducing the denominator (outstanding shares) mathematically increases the EPS, assuming net income remains constant.

This often makes the company's stock look more attractive to investors.

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