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How do you figure a company's Earnings Per Share EPS?

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Wiki User
October 13, 2011 9:31AM

It is simply the profit attributable to the shareholders over the number of shares in issue.

This is a very basic example of how this works. Please seek other reading before using this assessment to form any part of an investment decision.

Please also note that this is different from diluted EPS and the Adjusted figures which may also appear on the income statement

The answer above is correct, but I'd like to explain in other words:

To calculate EPS, first find the earnings available to the common stockholders by subtracting preferred dividends from earnings after taxes, and then divide by the number of common shares outstanding.

EPS is a very good indicator of a company's performance. It measures the amount of earnings per each outstanding share of a company's stock.

Formula:

EPS = Net Profit / Total No. of Common Shares or

EPS = Net Income / Total No. of Common Shares

Here the EPS calculated from the Net Profit would always be lesser than the one calculate from the Net Income but invariably both give us a good measure of the ability of the company to grow and generate additional revenue.

Usually EPS values are compared between companies or between values of the same company over a period of years.