What is earnings per share (EPS)?

Oct 12
The ratio of a company's net income to its outstanding shares is known as earnings per share (EPS). The indicator is employed to assess the performance of the company as well as its strength in comparison to other competitors.
Higher profits per share typically indicate a favorite when comparing firms, and a comparison of a company's present performance with prior periods reveals the characteristics of its business.

One of the most crucial metrics for assessing a business and selecting an investment target is its EPS. To assess a company's performance based on predicted earnings, investors and analysts carefully examine earnings reports, usually quarterly and annually.

The stock price may change dramatically in either direction if actual earnings drastically fall short of market expectations. The profitability, growth rate, and relative performance of a company are all reflected in EPS, one of the primary metrics used to assess a stock's value.

Net income less preferred dividends is divided by the total number of outstanding shares to arrive at earnings per share. You can change this computation to account for the dilution caused by contracts with common stock conversion rights, such as options, warrants, etc.

When all conceivable securities are converted into common stock, diluted profits per share represent the lowest possible earnings. Since it captures the dilutive power of other securities, diluted earnings per share are frequently preferred by analysts, even though they are always lower than core earnings.

Even though earnings per share (EPS) is one of the most often used indicators for assessing a company and its stock, it can be deceptive to market participants if a corporation buys back its shares, lowering the number of shares outstanding and inflating the EPS. The metric does not account for debt load or capital expenditures either.

Shares of the first firm should be more expensive if it can achieve the same earnings per share as the second company without incurring the same costs or liabilities.
Information about each company's earnings per share may be found on its home page. A table showing the financial results of prior periods can be found at the foot of this page. More specific information can be found in the "Reporting" section under the "Profit" heading.

You can sort companies based on several financial indicators, such as earnings per share, using a tool called Stock Filter.

The results are downloadable and can be added to your watchlist, and the resulting table includes sortable tabs and columns.

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