Sources: IRS, SEC, Federal Reserve, U.S. Bureau of Labor Statistics & U.S. Census Bureau. See our editorial standards.
A company’s net profit divided by its number of outstanding shares — the profit attributable to each share.
Definition: A company’s net profit divided by its number of outstanding shares — the profit attributable to each share.
Earnings per share distills a company’s profitability into a single per-share figure, making it easy to track over time and feed into other metrics like the P/E ratio. Rising EPS generally signals a healthier, more profitable business, which is why quarterly EPS announcements move stock prices.
EPS = (net income − preferred dividends) ÷ average outstanding shares.
A company earning $10 million in net income with 5 million shares outstanding has an EPS of $2.00. If next year it earns $12.5 million with the same shares, EPS rises to $2.50.
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