Direct Repurchase

DEFINITION of 'Direct Repurchase'

The buying of shares in a publicly-traded company by the company itself. A direct repurchase reduces the number of shares outstanding, thereby inflating (positive) earnings per share and, often, the value of the stock. The stock purchased by the company can then be retired or kept as treasury stock, which can be re-issued at a later date.

BREAKING DOWN 'Direct Repurchase'

Direct repurchases are often seen in a very positive light, as such transactions are generally done by companies looking to increase the equity value of their shares. However, just because a company announces the intent to repurchase outstanding shares, does not mean that it will definitely happen.
Until 2004, companies did not have to disclose whether they repurchased company stock or not. The SEC now requires that companies divulge their share repurchases for the past quarter in their 10-Q and 10-K filings.

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RELATED FAQS
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    Learn the difference between a stock repurchase and a stock redemption, and find out about the reasons why a company might ... Read Answer >>
  2. Why would a company buyback its own shares?

    Learn about share buybacks and some of the many reasons a company may choose to repurchase its own stock, including ownership ... Read Answer >>
  3. How does it affect a company's credit rating to buy back shares?

    Learn how buying back shares can negatively affect a company's credit rating if the company uses debt to finance a share ... Read Answer >>
  4. Under what circumstances would someone enter into a repurchase agreement?

    Learn when investors want to enter into a repurchase agreement, such as to gain quick access to liquidity and enjoy flexibility ... Read Answer >>
  5. What tax implications are there for parties involved with a reverse repurchase agreement?

    Learn about the tax consequences that the buyer can face as a result of a reverse repurchase agreement ("reverse repo") with ... Read Answer >>
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    Learn about the reasons a company may choose to buy back its outstanding shares, such as reducing the cost of capital and ... Read Answer >>
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