What is Earnings Per Share (EPS)?

Introduction: EPS

Earnings per share (EPS) is one of the most widely used ways to gauge company profitability.

EPS measures the net income earned on each share of a company's common stock. Basically, it gives you an idea of how profitable a company is.

How is EPS used?

1. There is no rule of thumb to interpret earnings per share of a company. The higher the EPS figure, the better it is. A higher EPS is the sign of higher earnings, strong financial position, and, therefore, a reliable company for investors to invest their money.

2. Use EPS to compare the earnings of different companies. Since each company has a different number of shares owned by the public, only comparing company earnings does not tell us how much money each company makes per share, so we need EPS to make a valid comparison.

3. Use EPS to calculate price-to-earnings (P/E) valuation ratio, where theE in P/E refers to EPS.

Formula

To calculate, just divide the company's profits by the number of outstanding shares:

Afraid of math? You can easily find the EPS of a stock on Moomoo.

Path: “Analysis” ----“Financial” ----“EPS”

Path: Swipe left to find “Analysis” ----“Financial” ----“EPS”

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