Which financial metric is most directly affected by stock buybacks?

The most directly affected financial metric by stock buybacks is shares outstanding. When a company repurchases its own shares, it effectively reduces the total number of shares available in the market. This action decreases the shares outstanding, which can have several implications for the company's financial metrics.

Specifically, when shares outstanding decrease, metrics such as earnings per share (EPS) can increase, as net income is divided by a smaller number of shares. However, the most immediate and direct effect of a stock buyback is the reduction in the total count of shares outstanding.

While stock buybacks can also influence net income (if the repurchased shares were previously diluting earnings), the immediate action of repurchasing shares directly corresponds to the change in shares outstanding. Total revenue and operating expenses are not directly impacted by the act of buying back shares, as these metrics pertain more to operational performance rather than the capital structure.