Earnings Per Share
Also known as: EPS, Diluted EPS, Basic EPS
Earnings per share (EPS) is a company’s net profit divided by its shares outstanding, the per-share measure of profitability that anchors the P/E ratio.
Earnings per share (EPS) expresses a company’s net income on a per-share basis. It is calculated by dividing net profit available to shareholders by the number of shares outstanding, and it is the most quoted single number in earnings reports.
Basic vs diluted
Basic EPS uses the current share count. Diluted EPS also counts shares that could be created from options, warrants, and convertible securities, giving a more conservative figure. Diluted EPS is the one investors usually focus on.
Why it matters
EPS feeds directly into the price-to-earnings ratio and is the figure most often measured against consensus estimates on an earnings call. Beating or missing EPS expectations frequently moves a stock more than the absolute result.