Course · Act IV: Earnings Season · Chapter 19
EPS, dilution and buybacks
Earnings per share, basic vs. diluted, and how share buybacks and stock-based compensation change what each share earns.
Key terms
- EPS
- Earnings per share: net income ÷ shares outstanding.
- Dilution
- New shares shrink each existing share’s slice. Diluted EPS counts options and grants.
- Buyback
- A company repurchasing its own shares, raising EPS without raising profit.
- Stock-based compensation
- Paying staff in shares or options: a real cost borne by existing shareholders.
“EPS, Dilution & Buybacks” is part of the full course: 6 puzzles on eps, dilution and buybacks, with a story that carries through all five acts. Try this act’s free chapter, “Anatomy of a Report”, first.