Explains what Earnings Per Share (EPS) means, and helps you to determine the EPS ratio of a company's stock.
This free online Earnings Per Share Calculator will calculate the EPS ratio for a stock given the net income, preferred dividends paid, and the number of common shares outstanding.
If you don't know the answer to the question, "What is EPS?", it may help to read the following explanations related to what EPS is, how it's calculated, and what may or not be included in it -- before using the earnings per share calculator.
What is EPS?
EPS is an acronym for Earnings Per Share. Earning per share is one of the figures used in calculating a company's P/E Ratio (price to earnings ratio) and is also often used by investors to compare the growth (shrinkage) of a company's earnings from year to year, as well as to forecast future growth of earnings.
EPS comparisons and forecasts can then be used for deciding which stock to purchase shares in and/or when to sell a shrinking EPS stock in exchange for buying a growing EPS stock.
EPS Formula
EPS is calculated by subtracting the preferred dividends paid from the net income, and then dividing that result by the average number of common shares outstanding.
For example, if a company reported a net income of $25,000,000, preferred dividends totaling $1,000,000, and an average of 12,500,000 common shares outstanding, the earnings per share ratio would be 1.92 ((25,000,000 - 1,000,000) ÷ 12,500,000 = 1.92).
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