If you ignore taxes and transaction costs, a stock repurchase will reduce the PE ratio more than an equivalent stock dividend.

A stock repurchase reduces the number of shares outstanding, potentially increasing earnings per share (EPS) if all other factors remain constant, which could lower the PE ratio if the stock price doesn't change. However, a stock dividend redistributes earnings without changing the fundamental value of the company, thus not directly affecting the PE ratio. The impact on the PE ratio from both actions depends on market reaction and changes in earnings, not just the action itself.