Buyback

The classic item gives you cash, shares outstanding, and a repurchase price, then asks for the change in book value per share (BVPS): BVPS rises when the repurchase price is below the pre-buyback BVPS and falls when it is above — book value is the comparison line here, not market price or intrinsic value. The parallel EPS version is debt-funded; the tell is whether the after-tax cost of debt is below the earnings yield (E/P, the inverse of P/E). Watch the trap that higher EPS automatically means more value: it does not, because a shrinking share count, not higher earnings, drove the number.

A frequent distractor pits buyback against dividend: with no tax or signaling differences and a repurchase at fair market price, an equal-sized buyback and cash dividend leave shareholder wealth identical — only the form differs. Don’t conflate a buyback with reversing dilution: it cuts the count but doesn’t claw back value already transferred to option holders. Memory hook: buy low, build value — repurchasing under intrinsic value rewards the holders who stay.