A stock buyback is a strong sign of financial health. It indicates that a company has sufficient capital to cover its expenses and repurchase its own shares. Stock buybacks increase an investor's earnings and the value of shares. When a company buys back its stock, the total number of outstanding shares is reduced. That increases the price of every share an investors owns along with an investor's earning per share.
Buybacks anticipate higher share prices.
Stock buybacks save taxes. If a company pays a dividend, the investor has to report and pay taxes on it right away. When a company buys back its stock, an investor's wealth increases along with share prices, buy the investor has no immediate tax obligation. Buyback stocks can provide a safety net. A company that holds a large number of its own shares will often step in to purchase more shsares when prices decline.