Earnings Per Share (EPS)

Earnings Per Share (EPS) is a financial metric that indicates the portion of a company’s profit attributable to each outstanding ordinary share. It’s a core profitability indicator for equity investors and a key component in stock valuation and comparative financial analysis.

Formula:

EPS = (Net Income – Preferred Dividends) / Weighted Average Shares Outstanding

EPS can be:

• Basic EPS: Using existing outstanding shares.

• Diluted EPS: Accounting for potential dilution from stock options, convertible debt, and other securities.

Higher EPS values generally suggest better profitability, but it's essential to consider EPS trends over time, company growth prospects, and market context before drawing investment conclusions.