Replies to post #5501 on NewAge Inc (fka NBEVQ) (NBEVQ)

[Altitrade Partners]

Dilution is NEVER accretive. Dilution refers to increasing the share count.

If earnings have to be spread over a larger number of shares, typically, the earning per share (EPS) is lower.

For example $100,000 in net profit, spread over 100,000 shares results in EPS of $1.00. Now increase the number of shares (dilution) by 50,000 shares and now that $100,000 net profit divided by 150,000 shares, resulting in EPS of roughly 0.67 cents.

One of the reasons why the stock market has climbed to almost irrational levels is because companies have been buying back their own shares; thus shrinking the share count. This makes financial results look better since the net profit is spread over a lower number of total shares.

The word accretive generally applies to a situation where one company is being merged into another either by a stock swap or takeover.