Samsung Electronics Announces Plan To Buy Back 11.3 Trillion Won Worth Of Shares To Boost Shareholder Value

Samsung Electronics announced a 11.3 trillion won share buyback on Thursday following its report of the company's first on-year revenue growth in a couple of years, Reuters forecasted on the same day.

According to reports, the tech giant plans to buy back 11.3 trillion won worth of shares to cancel all shares procured and to improve its shareholder value.

Prior to its announcement, Samsung Electronics revealed its earnings in the third quarter of the year which shows a 1.3 percent increase from the second quarter.

"I think the market is pleased with the results and happy to see the company taking steps to clean some of the $52 billion in cash and short-term assets off its balance sheet to the benefit of shareholders," said Endpoint Technologies Associates president and founder Roger Kay, as noted by CNBC on Wednesday.

Samsung Electronics wanted to boost its undervalued share price that is why the company initially announced it will buy back 4.2 trillion won worth of shares from Friday until January 29, 2016.

"Samsung believes that the current share price and the market value of Samsung Electronics are severely undervalued both in terms of the ability to generate earnings and also in terms of the underlying asset or equity value of the company," Samsung Electronics said in a dispatch.

A research director of devices and ecosystems says the company announced a share buyback to fuel the stock price and entice investors.

"Samsung continues to believe its stock is undervalued considering it sees itself as a 'unicorn' company in consumer hardware space," said Neil Shah of Counterpoint Research.

Shah goes on, "Hence, the company has announced a share buyback to stimulate the stock price and [get] investors to value Samsung's stock relative the potential and unmatched scale it brings to the table."

Aside from improving its undervalued share price, Samsung Electronics also plans to "return between 30 to 50 percent of its annual free cash flow over the next three years, via dividends or share buybacks."

In addition, the tech giant also thinks of shelling out dividends quarterly beginning 2016.