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Earnings per Share (EPS)

Last updated 25th Apr 2022


The financial ratio earnings per share, or EPS, is perhaps the single most popular variable used by analysts and investors to evaluate the profitability of a company. EPS measures the profitability of a company on a per share basis.


Earnings per Share = (Net Income - Preferred Dividends) / Shares Outstanding


A profitability ratio, earnings per share provides the investor with a measure of the profits of a company, as generated for each share of common stock outstanding. Since the number of shares outstanding can change over time, the metric typically uses a weighted average value.

There are several variations on the earnings per share calculation, including:

  • Diluted EPS: which uses the outstanding shares plus convertibles or warrants outstanding
  • Trailing EPS: which uses last year's earnings and common shares (the actual EPS reported in financial statements)
  • Current EPS: which uses the current year's projected earnings
  • Forward EPS: which is typically based on analysts' projections for a future year


Company A's income statement indicated net income of $4,283,000, and no payment of preferred dividends. The weighted average number of common shares outstanding for this same time period was 706,766. The trailing EPS for Company A would be:

= ($4,283,000 - $0) / 706,766, or $6.06 per share

Related Terms

net income, retained earnings, fully diluted earnings per share, statement of retained earnings, diluted earnings per share

Moneyzine Editor

Moneyzine Editor