How will the additional 7,138,050 shares affect EPS dilution and valuation metrics?

Impact on EPS and valuation

The 7.14 million‑share issuance will increase Horizon Bancorp’s share count by roughly 12‑15 % (the company currently has about 48‑55 M shares outstanding). Assuming net income stays flat, earnings‑per‑share (EPS) will be diluted by the same proportion – a 12‑15 % reduction in the headline EPS figure. Because the equity raise is priced at the current market level, the cash proceeds will be added to the balance sheet, but the immediate effect on valuation multiples will be a mechanical upward shift in the denominator of most ratios. For example, a pre‑offering P/E of 9× will, all else equal, rise to about 10‑11× after the dilution, while price‑to‑book will move from ~1.2× to roughly 1.3‑1.4×. The net‑income‑to‑cash‑conversion ratio will also look weaker until the new capital is deployed to generate incremental earnings.

Market dynamics & technical outlook

In the short run the market typically reacts to a “dilutive” equity offering with a modest price concession – often 3‑5 % below the prior close – as investors price‑in the larger share base and the cash‑raising motive. The trade‑day volume spike (the underwritten placement) can trigger a brief oversupply, pushing the stock toward its recent low‑to‑mid‑range support (around $1.70‑$1.75). On the daily chart, the offering creates a fresh “supply” node; if the price holds above the $1.80 level, the pattern resembles a shallow “cup” that often precedes a bounce, whereas a break below $1.70 could open a short‑term downtrend toward the $1.55‑$1.50 trough.

Actionable trading implications

• If you are long: View the dilution as a buying opportunity if the price slides 5‑7 % below the pre‑offering close and the balance sheet looks healthy. The added capital can fund loan growth or acquisitions, which would eventually offset the EPS hit. Set a stop just below the $1.70 support to protect against a deeper sell‑off.
• If you are short: Target the $1.55‑$1.50 range as a potential “post‑offering” low, especially if the company does not articulate a clear use‑of‑proceeds plan. Watch for bearish volume and a break of the $1.70 support on the daily chart as a trigger.
• Fundamentally: Keep an eye on the next earnings release. If management can lift net income by >12 % (matching the share increase) the dilution will be neutralized and the valuation multiples will actually improve, turning the short‑term price weakness into a longer‑run upside catalyst.