Treasury Stock in a sum-of-the-parts valuation?

I saw a report recently where the analyst assigned a value for each operating segment, then adjusted for cash and debt, and then included a positive value for Treasury Stock. I guess I don’t understand this. If a company buys back shares, wouldn’t you just adjust the share count downward? Why would you ever include Treasury Stock in a SOTP valuation?

Thinking out aloud… Perhaps to reflect the cash that could be generated by selling these shares either through exercise of options or secondary offering. I realize that this is dilutive but for valuation purposes it will increase cash/share.

How will it increase your “cash/share”? Doesn’t your cash and shares go up by a proprotional amount, unless you issue new shares at a price significantly above/below the current price?

Not necessarily (proportionate amount). In majority of the cases,(to the best of my knowledge) cash as a “value” is much less than the no of shares outstanding (unless you are Apple). Therefore, cash/share is way below Mkt price /share. So for every share issued the effect of the positive difference between cash/share and mkt price/shares amplifies the rate at which cash/share increases. for eg. Consider a company with the following: Cash 10 mill Outstanding shares - 20 mill Treasury Stock - 1Mill Stock Price 10 Current cash/share + .50 Sell Treasury stock at $10 = $10 x 1mill = $10 Mill Cash now is 20 mill Outstanding shares is 21 mill Cash/share is = .95 Hopefully, this explains my comment. A 5% increase in share outstanding resulted in a 100% increase in cash and a 47.5% increase in cash/share.