What it means
Buybacks reduce shares outstanding, mechanically increasing earnings per share and ownership concentration for remaining shareholders. They've become the dominant form of capital return for U.S. companies, exceeding dividends.
Why it matters
Buybacks are flexible (can be paused without signaling distress) and tax-efficient (no immediate tax to shareholders). Critics argue they prioritize short-term EPS over long-term reinvestment.
How to use it
Look at trailing buybacks vs free cash flow - if buybacks consume more than 70% of FCF, that's an aggressive return policy. Sustained buybacks at depressed prices are often a positive signal.
Take it further
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