## The Math Behind Corporate Buybacks

When a company repurchases its own shares from the open market, it reduces the total number of outstanding shares. Even if the company's fundamental Net Income doesn't change, the Earnings Per Share (EPS) artificially inflating, making the stock appear cheaper on a P/E basis and inherently driving the share price higher.

### FAQ

**Q: Why do companies buy back stock instead of issuing dividends?**
A: Dividends trigger immediate taxable events for all shareholders. Buybacks simply increase the intrinsic value of the remaining shares without triggering immediate tax liabilities for investors who choose not to sell.