What Is EPS?
EPS means earnings per share. It is the company's profit divided by the number of shares. It tells you how much profit belongs to each single share.
How to calculate EPS
A company earns $10 billion in a year and has 2 billion shares. Its EPS is $5. If you own 100 shares, $500 of that year's profit is yours on paper.
What does EPS tell you?
On its own, not much, because companies have very different numbers of shares. What matters is the trend. EPS that rises year after year means each share is earning more. That is one of the strongest drivers of a rising share price.
What is a good EPS?
There is no good number by itself. A $2 EPS can be great for one company and poor for another. Instead, ask two things: is EPS growing, and what price are you paying for it? The second question is the P/E ratio.
Why EPS can rise without more profit
If a company buys back its own shares, there are fewer shares left. The same profit split over fewer shares means a higher EPS. That is good for owners, but check that real profit is growing too.
EPS in the news
When a company "beats earnings", its EPS came in above what analysts expected. Expected EPS for next year is used in the forward P/E.
See it in real companies
Open a company to see what it sells and how it makes money.