Originally published: 20/06/2016 14:28
Publication number: ELQ-78066-1

Effect of a buyback on Earnings per Share (EPS) and Value

Assess how a buyback will affect EPS and Value

by Prof. Aswath Damodaran
Professor at NYU Stern School of Business

with NYU Stern School of Business
An Education in Possible

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value finance buyback earnings per share eps effects consequences

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

Objectives

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