Are Share Repurchases Slowing Down This Pizza Company?
When Domino's Pizza (NYSE: DPZ) announced plans this quarter to buy back $1 billion worth of stock, it raised concerns for some about the sustainability of Domino's growth trajectory. The concerns were tied, in part, to the fact that the share repurchases come at a time when the largest pizza chain in the world is also missing same-store sales estimates and lowering growth forecasts.
Share repurchases, commonly referred to as buybacks, occur when a company uses capital to purchase shares from the open market or from other investors. By reducing the number of outstanding shares, management can increase share value in the short term without binding the company to a dividend payment increase.
a Domino's Pizza storefront in Pensacola, Florida. Image Source: Domino's.
Source Fool.com
