Buyback Ratio

Sometimes companies buy back their own shares from outside investors. They do this for several reasons: to eliminate having to pay dividends, to pull control back into the business, or even if they feel the shareholders are undervaluing the shares. The buyback ratio is the amount of money the business has spent buying back its shares, divided by its market capitlization over that same period (usually measured over a year).

Buybacks allow management more flexibility, with more control and less concern for regular payments to shareholders. Plus, the fewer outstanding shares, the greater the shares that are still outstanding are worth. Often, businesses that do buybacks are high performers, because they're the businesses making changes and keeping shares moving, rather than letting the shares (and their businesses) do the same old same old...for years.