What Is EPS (Earnings Per Share)?
What is earnings per share?
EPS slices total profit into per-share terms. Formula: EPS = (Net Income − Preferred Dividends) ÷ Shares Outstanding.
How do you calculate EPS?
Take net income from the income statement, subtract preferred dividends, divide by weighted average shares outstanding.
Basic vs diluted EPS?
Basic uses current shares. Diluted also includes shares from options and convertibles. Diluted is the more conservative figure.
Why do buybacks inflate EPS?
Buybacks reduce shares outstanding, the EPS denominator. EPS rises even with flat profits.
Frequently asked questions
Can EPS be negative?
Yes. If a company posts a net loss, EPS is negative. Common in early-stage growth companies.
How often is EPS reported?
Every quarter, with the earnings release.
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