Earnings Per Share (EPS)
Earnings Per Share (EPS) Meaning |
Earnings per share or EPS is a common metric for calculating corporate value. EPS is a financial ratio that divides net earnings available to common shareholders by the average number of shares outstanding over time.
It shows how much money a company makes for each share of its stock, which indicates its profitability.
When examined alongside the share price and the number of shares outstanding, EPS makes more sense as an indicator of a company’s profitability and distribution amongst shareholders.
When analyzing stocks of companies within the same industry, investors usually consider the EPS as well as the share price.
It is preferable to buy shares with a higher EPS because it indicates a better return on investment.