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Effect of a buyback on Earnings per Share (EPS) and Value
  • Effect of a buyback on Earnings per Share (EPS) and Value
  • Effect of a buyback on Earnings per Share (EPS) and Value
Originally published: 20/06/2016 14:28
Publication number: ELQ-78066-1
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Effect of a buyback on Earnings per Share (EPS) and Value

Assess how a buyback will affect EPS and Value

Prof. Aswath Damodaranby Prof. Aswath Damodaran
Professor at NYU Stern School of BusinessFollow 1,062
NYU Stern School of Businesswith NYU Stern School of Business
An Education in PossibleFollow 56
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valuefinancebuybackearnings per shareepseffectsconsequences
Description
This excel model enables you to assess how a buyback will affect earnings per share and make judgments on its consequences for overall value and value per share.

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (www.damodaran.com)

This Best Practice includes
1 Excel Model File

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Further information

The objective of this model is to get the following output values:

Value Impact
Pre-buyback vs post-buyback
- beta
- Debt to Equity Ratio
- Debt to Capital Ratio
- Cost of equity
- After-tax cost of debt
- Cost of capital
- Enterprise value
- Firm value
- Debt outstanding
- Equity value
- Number of shares
- Price/share

Value Transfer (pre-buyback)
- value per share pre-buyback (if available)
- price on buyback
- number of shares bought back
- value transfer to remaining shareholders
- remaining shares
- value transfer per remaining share
- price per share with value transfer


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