Why do companies buy back their own stock?

Answer 1

Companies Buying Their Own StockTo keep controlling interest in the company and not in someone else's hands.

There is a second reason as well. If they are sitting on cash and think the stock is under-valued, they will invest in their own company. This does two things. First it props up the price by increasing the buy side demand. Second, it provides them the opportunity to enjoy a gain in the exchange when they put those share back into the market at a higher price.

It also helps increase the Earning Per Share EPS, when earnings come out they put them into a per share basis. When companies buy shares they are no longer considered outstanding, so the same amount of money is divided among less shares. Want to chat about trading the Dow.