ECMSource Research Workbench · Capital markets
Model how a primary share issuance changes the share base, existing ownership percentage, gross proceeds, and earnings per share if earnings initially remain unchanged.
Model the issuance
Interpret these results with the filing notes and management discussion. A calculated change is not automatically positive or negative for the investment.
What the model assumes
All new shares are primary shares issued by the company. It excludes secondary shares sold by existing holders, underwriting discounts, fees, taxes, options, warrants, convertibles, and overallotments.
The EPS comparison deliberately holds earnings or losses constant. If management invests the proceeds successfully, future results may change. The calculator does not estimate that return.
Core formulas
Post-deal shares = existing shares + new shares
Dilution = new shares / post-deal shares
Existing ownership retained = existing shares / post-deal shares
Gross proceeds = new shares × offer price
Illustrative post-deal EPS = unchanged net income / post-deal shares
Always read the prospectus or offering document. A deal can include primary and secondary components with very different effects on the company.
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