Earnings per Share

Earnings per Share or EPS is perhaps the single most popular variable used to determine the profitability of a company.  Earnings per share is simply 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