Back to Home
EPS
(Earnings Per Share)
EPS (Earnings Per Share) measures a company's profitability by dividing net income by outstanding shares. It's a key metric in valuation ratios like P/E (Price-to-Earnings).
For example, if Apple earns $100B net income with 16B shares, EPS is $6.25. Analysts track 'adjusted EPS' (excluding one-time items) and 'diluted EPS' (counting stock options). Higher EPS often boosts stock prices, but quality matters—companies can artificially inflate EPS via buybacks. The GAAP standards govern EPS reporting. Investors compare EPS growth across sectors (tech vs. utilities) and use it with EBITDA for holistic analysis. Negative EPS may signal trouble (e.g., pre-profit startups).
For example, if Apple earns $100B net income with 16B shares, EPS is $6.25. Analysts track 'adjusted EPS' (excluding one-time items) and 'diluted EPS' (counting stock options). Higher EPS often boosts stock prices, but quality matters—companies can artificially inflate EPS via buybacks. The GAAP standards govern EPS reporting. Investors compare EPS growth across sectors (tech vs. utilities) and use it with EBITDA for holistic analysis. Negative EPS may signal trouble (e.g., pre-profit startups).