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
  1. Why would a company choose to repurchase in lieu of redeem?

    Learn the difference between a stock repurchase and a stock redemption, and find out about the reasons why a company might ... Read Answer >>
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    Learn how buying back shares can negatively affect a company's credit rating if the company uses debt to finance a share ... Read Answer >>
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