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Earnings per Share, or EPS, are perhaps the single most popular variable used to determine the profitability of a company. Earnings per share are the net profits of a company divided by the number of outstanding shares issued.
Earnings per share is calculated:
(Net Income - Preferred Dividends) / Shares Outstanding
There are several variations on the earnings per share calculation,
- Diluted EPS - uses outstanding shares plus convertibles or warrants outstanding
- Trailing EPS - uses last year's numbers and the actual EPS reported
- Current EPS - uses this year's projected numbers
- Forward EPS - typically based on analysts' projections
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