A value ration that shows the portion of net income for a period attributable to a single common share of a company. For example, a company with $100 million in earnings and with 100 million common shareholders would report an EPS of $1 per share.
What is Earning Per Share (EPS)?
Earnings per share (EPS) is a financial metric that measures the portion of a company’s profit allocated to each outstanding share of its common stock. It is calculated by dividing the company’s net income by the number of its outstanding shares of common stock.
EPS is a widely used and important financial metric that provides investors with a simple and straightforward measure of a company’s profitability. It helps investors determine the value of a company’s stock, as well as assess its potential for future growth.
For example, if a company has a net income of $100 million and 10 million outstanding shares of common stock, its EPS would be $10.00 ($100 million / 10 million shares).
EPS can be useful for comparing the profitability of different companies, or for evaluating the performance of a company over time. However, it is important to consider other factors, such as the company’s financial health and growth prospects, when making investment decisions.
EPS is also a key factor in determining a company’s stock price, as investors typically value a company based on its earnings potential. Companies with higher EPS are often considered more attractive to investors, as they are seen as having a higher potential for future growth and profitability.
Overall, EPS is a critical metric for investors and companies, providing valuable information about a company’s profitability and potential for future growth.
