EPS (Earnings Per Share)
"The profit earned by one share" — net income divided by the number of shares outstanding; the denominator in the PER calculation.
EPS = Net income ÷ Shares outstanding (diluted)
When EPS rises, the profit earned by one share has grown.
In plain terms
If a company earns $100 million in a year and has 10 million shares, each share earned $10. That $10 is EPS (earnings per share).
It divides the company's total profit into small pieces by share count, turning it into "how much did my one share earn." It's the basic concept used as the denominator of PER, which looks at the level of the share price.
What it tells you
EPS converts company profit to "one shareholder's eye level." Even if total net income rises, if the company issued a lot of new shares, the per-share portion (EPS) may not rise, so EPS shows the real profit growth from a shareholder's standpoint.
When the news says "earnings surprise," EPS is usually what's being compared. If actual EPS comes in above the EPS the market expected, that's a surprise.
Formula
EPS = Net income ÷ Shares outstanding (diluted) EPS (TTM) = Sum of net income for the last 4 quarters ÷ Shares outstanding (diluted)
What high or low means
When EPS rises, the profit earned by one share has grown. Steady EPS growth is the foundation on which shareholder value accumulates.
A single quarter's EPS can jump around due to one-time items, so looking at it on a TTM basis, summing the most recent four quarters, is more stable.
EPS can rise not because "profit grew" but because "the share count shrank." When a company buys back and retires treasury shares, the denominator (share count) falls and EPS goes up. The same EPS increase means something different when net income itself grew versus when the share count fell (Stocklore's context reading points out this "source of EPS growth").
Basic EPS and diluted EPS differ. Diluted EPS is the conservative figure, assuming stock options and convertible bonds all turn into shares and counting a larger share count. For companies with heavy stock compensation, the gap between the two is large (this dictionary uses the diluted basis).
The "adjusted EPS" a company announces is calculated with certain costs excluded, so it can look better than EPS under accounting standards. The number changes depending on which EPS is being referred to.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see EPS alongside the sector benchmark.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.