Glossary
Definition
Earnings Per Share (EPS)
A company's net profit divided by its number of outstanding shares.
Earnings Per Share (EPS) is calculated by dividing a company's net profit by its total number of outstanding shares. It is one of the most commonly cited metrics for assessing company profitability on a per-share basis. 'Diluted EPS' includes stock options and convertible instruments in the share count.
Frequently Asked Questions
Is a higher EPS always better?
Higher EPS generally signals stronger profitability, but context matters. Companies can boost EPS through share buybacks (reducing the share count) without improving actual earnings. Investors typically look at EPS growth trends over multiple quarters or years.