How Stock Repurchases Affect Earnings Per Share

Companies sometimes use stock repurchases to increase their earnings per share. This video examines how a share repurchase would affect earnings per share in 3 difference scenarios:

Example 1: the company repurchases common shares
Example 2: the company repurchases common shares and incurs an excise tax on the repurchase
Example 3: the company repurchases preferred shares, thereby decreasing the total dividend paid to preferred shareholders

0:00 Introduction
0:57 Example 1 (repurchase of common shares)
3:33 Example 2 (repurchase of common shares with excise tax)
7:06 Example 3 (repurchase of preferred shares)
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[dougjohnson]

Does the 1% excise tax apply to preferrred stock? He doesn't say.

[flake]

Always love your example company's. I'll buy the IPO!

[cab]

On your 2nd example, why was the denominator of 12M weighted average number of common shares decreased to 10M? Where did the change of 2M come from?

[andraanggrawijaya]

👍👍 What's the app to make this video?

[profitsdaily]

"Success is liking yourself, liking what you do, and liking how you do it." --Maya Angelou

[anthonyoleary]

why do you not have to factor in the purchase price of the shares?