Impact on EPS and valuation multiples
Because the NCIB will retire up to 1 million shares – roughly 4.6 % of the total 21.73 million shares outstanding – the share count on which Inter‑Rock’s net income is spread will fall by the same proportion. Assuming earnings remain unchanged, the earnings‑per‑share (EPS) will rise by about 4.6 % (i.e., 1 / 21.73 ≈ 4.6 % × current EPS). The reduction in the denominator also lifts the “earnings‑per‑share” component of any valuation multiple. If the market continues to price the stock at the same enterprise‑value (EV) after the buy‑back, the price‑to‑earnings (P/E) ratio will fall roughly 4.6 % (EV / higher EPS). Conversely, if investors view the repurchase as a signal of confidence and bid the share price up, the P/E could stay flat or even expand, effectively re‑rating the stock at a richer multiple.
Trading implications
From a fundamentals perspective, the modest‑size repurchase is unlikely to overhaul the company’s valuation, but the automatic EPS boost can make the stock look more attractive on a relative‑valuation screen, especially versus peers in the junior‑miner space that are still trading at high P/E multiples. Technically, the announcement has already injected a short‑term buying bias; the price has tended to find support near the recent 20‑day moving average and test the prior swing‑high of CAD 0.85. If the market digests the buy‑back as a “capital‑return” signal, we could see the price retest the 20‑day average with upside momentum, offering a potential entry around CAD 0.80‑0.82 with a target near the recent high (≈ CAD 0.88). Conversely, a failure to hold the support level would suggest the market is discounting the EPS benefit and could open a short‑cover rally back to the 20‑day average. In short, the 4.6 % share cancellation modestly lifts EPS, nudges the P/E lower (or flat if price appreciates), and creates a short‑to‑medium‑term bullish bias for traders who can capture the price‑support bounce.