Enter the net income value in your selected currency.
Enter the number of shares outstanding.
History:

Explanation

What is Earnings Per Share (EPS)?

Earnings Per Share (EPS) is a financial metric that indicates how much money a company makes for each share of its stock. It is a crucial measure for investors as it provides insight into a company’s profitability and is often used to compare the performance of companies within the same industry.

How to calculate EPS?

EPS can be calculated using the following formula:

Earnings Per Share (EPS) is calculated as:

§§ EPS = \frac{Net\ Income}{Shares\ Outstanding} §§

where:

  • § EPS § — Earnings Per Share
  • § Net Income § — The total profit of the company after all expenses, taxes, and costs have been deducted.
  • § Shares Outstanding § — The total number of shares of stock that are currently owned by shareholders.

Example:

If a company has a net income of $100,000 and 10,000 shares outstanding, the EPS would be calculated as follows:

§§ EPS = \frac{100000}{10000} = 10\text{ USD} §§

This means that the company earns $10 for each share of its stock.

When to use the EPS Calculator?

  1. Investment Analysis: Investors can use EPS to evaluate the profitability of a company and compare it with other companies in the same sector.

    • Example: Comparing the EPS of two competing companies to determine which is more profitable.

  2. Financial Reporting: Companies report EPS in their financial statements, making it a key figure for stakeholders.

    • Example: Reviewing quarterly earnings reports to assess company performance.

  3. Valuation Metrics: EPS is often used in conjunction with the Price-to-Earnings (P/E) ratio to determine if a stock is overvalued or undervalued.

    • Example: Calculating the P/E ratio by dividing the stock price by the EPS.

  4. Performance Tracking: Companies can track their EPS over time to gauge growth and profitability trends.

    • Example: Analyzing EPS growth year-over-year to assess business expansion.

  5. Dividend Decisions: EPS can influence dividend policies, as companies with higher EPS may be more likely to distribute dividends to shareholders.

    • Example: A company with a consistently high EPS may decide to increase its dividend payout.

Practical examples

  • Investment Decisions: An investor might use the EPS calculator to quickly assess the profitability of a stock before making a purchase.
  • Company Performance Review: A financial analyst could use the calculator to evaluate a company’s performance over different quarters or years.
  • Comparative Analysis: A business student might use the EPS calculator to compare the financial health of various companies for a project.

Use the calculator above to input different values for net income and shares outstanding to see how the EPS changes dynamically. The results will help you make informed investment decisions based on the company’s profitability.

Definitions of Key Terms

  • Net Income: The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.
  • Shares Outstanding: The total number of shares of a company’s stock that are currently owned by shareholders, including shares held by institutional investors and company insiders.

By understanding and utilizing the EPS calculator, you can gain valuable insights into a company’s financial performance and make more informed investment choices.