Investing
Earnings Per Share (EPS)
A company's net profit divided by the number of outstanding shares.
Definition
Earnings Per Share (EPS) is a measure of a company's profitability calculated by dividing net income by the number of outstanding common shares. Basic EPS uses the actual number of shares outstanding, while diluted EPS accounts for potential shares from stock options, convertible bonds, and warrants. EPS is a key metric used in the P/E ratio and is closely watched during quarterly earnings reports. Growing EPS over time generally indicates improving profitability. Companies that consistently beat EPS estimates often see their stock prices rise, while missing estimates can trigger sell-offs.