Wednesday, January 27, 2016

What does EPS (Earnings Per Share) Mean?

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Calculated as: (Net Income-Dividends on Preferred Stocks)/Average Outstanding Shares

Earnings Per Share (EPS)

When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.

Calculating EPS:

Earnings per share (basic formula)

\mbox{Earnings Per Share}=\frac{\mbox{Profit- Preferred Dividends}}{\mbox{Weighted Average Common Shares}}

Earnings per share (net income formula)

\mbox{Earnings Per Share}=\frac{\mbox{Net Income - Preferred Dividends}}{\mbox{Average Common Shares}}

Earnings per share (continuing operations formula)

\mbox{Earnings Per Share}=\frac{\mbox{Income from Continuing Operations - Preferred dividends}}{\mbox{Weighted Average Common Shares}}

---Hope this was helpful!
About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on

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