Earnings Per Share (EPS)

Earnings Per Share (EPS) is the company's net profit divided by the number of outstanding shares. It shows how much profit belongs to each share.

Formula

EPS = Net Income ÷ Shares Outstanding

If a company earns $100 billion and has 15 billion shares, EPS = $6.67 per share.

Trailing vs. Forward

Trailing EPS uses the last 12 months of actual earnings.

Forward EPS uses analyst estimates for the next 12 months.

GAAP vs. Adjusted

GAAP EPS follows accounting standards and includes all charges.

Adjusted EPS excludes one-time items to show "normalized" earnings.

Why It Matters

EPS is a key input for the P/E ratio and PEG ratio. Companies with growing EPS usually see their stock prices rise over time. EPS growth is often more important than the absolute EPS value.

Key Takeaway

Compare EPS growth rates across similar companies, not absolute EPS numbers (a $2 EPS and a $5 EPS are not directly comparable). Use P/E or PEG ratios for valuation instead.