Handeware
Investing

Earnings per share

$5.10

This is arithmetic for general information, not financial advice.

Earnings Per Share Calculator

Earnings per share, or EPS, is how much of a company's profit belongs to each share. Enter the profit and the share count to see it.

How it works

Take net income and subtract any dividends owed to preferred shareholders first, since they are paid before common shares. Then divide what is left by the number of shares outstanding.

Companies report basic EPS on their income statements. Diluted EPS counts extra shares that options and convertible securities could create, so it is usually a little lower.

Worked example

A company that earned $500,000,000.00 after $0.00 of preferred dividends, spread over 98,000,000 shares, shows earnings of $5.10 per share.

Questions

Which share count should I use?

Use the weighted average number of shares for the period. It is in the income statement and reflects shares issued part of the way through the year.

Can EPS be negative?

Yes. A loss gives a negative number, worked out the same way: the loss is divided across the shares.

Is a higher EPS always better?

Not on its own. EPS can rise because of share buybacks rather than growing profit, so compare it over several years and with similar companies.

More like this

All Investing calculators