Accretive buyback
Definition · Level 9 · Valuation
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A share repurchase that raises earnings per share: the earnings yield of the shares bought (EPS ÷ price) beats the after-tax cost of the cash used. At a high enough P/E the same repurchase lowers EPS (dilutive).
Example
Brewline earns a 7% yield at $20 a share and borrows at 4.5% after tax: EPS rises 3.7%, to $1.45. At $56 (40x) the same $140M cuts EPS to $1.36.
Where Tradecraft teaches it
Level 9 · Valuation, in the lesson “Per-share numbers and returns on capital”: Basic vs diluted EPS, dilution, buybacks, ROE, ROA, ROIC and DuPont.
Related terms
- Basic vs diluted EPSNet income per weighted-average share outstanding, versus the same figure including shares that options, RSUs, warrants and convertibles could create.
- DilutionGrowth in the share count from new issuance, option exercise, RSU vesting or convertible conversion, which shrinks each existing holder’s slice of…
- DuPontSplitting ROE into net margin × asset turnover × equity multiplier, to show whether returns come from profitability, efficiency or leverage.
- EPSEarnings per share: net income (after preferred dividends) ÷ weighted-average shares outstanding — the profit figure analysts forecast and the P/E…
- ROAReturn on assets: net income ÷ total assets — how much profit the entire asset base generates.
- ROEReturn on equity: net income ÷ shareholders’ equity — the return earned on the owners’ book capital.