Earnings Per Share (EPS)

Definition

Earning per share is widely knows as EPS and it indicates the amount of money a company makes per share of stock.

Calculations

EPS = Net Income/Shares Outstanding

Why is this important?

Not only is EPS a quick measure of earnings that are available to shareholders but is also an indication of how profitable a company is. Generally, investors keep their eyes on EPS to gauge if a company is consistently growing profits quarter over quarter or year over year.

Financial Glossary Reference

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