Earnings Per Share (EPS)

Definition: The EPS is the total profits of a company divided by the number of shares.  A company with $1 billion in earnings and 200 million shares would have earnings of $5 per share.

TeenAnalyst Advice: A good way to determine whether or not a company is growing is by looking at their earnings per share now compared to previous years.  For example, if a company has $5.00 EPS this year and $4.00 EPS last year, we would say that their earnings grew 25%.

It's also important to remember that if a company issues more shares of stock, it "dilutes" the EPS figures.  So investors are usually not happy when companies announce secondary offerings.  Unless, of course, the money the company raises will be put to use well.

Jonny Boy said:

Jodi - could this definition be considered more updated? arnings per share (EPS) are the total earnings divided by the number of share outstanding. There are three formulas that are used to determine earnings per share. . The earning per share basic formula, the earnings per share, net income formula, and the earnings per share, continuing operations formula. The EPS formulas do not include preferred dividends outside of continued operation and net income. In the United States, the Financial Accounting Standards Board requires the earnings per share be recorded on the company's income statement. They require EPS records on net income, continuing operations, discontinued operations, and extraordinary items. It should all be reported on the Income statement

ryan said:

DOESN'T EXPLAIN ANYTHING ABOUT FINANCE. GOOD LUCK FINDING STOCKS.