Earnings Per Share (EPS)
Net profit attributable to each ordinary share in issue
What is Earnings Per Share (EPS)?
Earnings per share is the portion of a company's profit that belongs to each ordinary share. It shows how much profit is earned for every share held.
It is one of the most closely followed measures by investors, and is often used to judge a company's profitability and to compare performance over time.
How this KPI is measured
- Function
- Finance
- Sub-function
- Financial Reporting
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- $ per share
- Measurement frequency
- Quarterly / Annual
- Formula
- (Net profit − Preferred dividends) / Weighted average shares outstanding
How to calculate it
Subtract preferred dividends from net profit, and divide by the weighted average number of shares outstanding.
For example, with net profit of 12,000,000, preferred dividends of 2,000,000 and a weighted average of 10,000,000 shares, EPS is (12,000,000 - 2,000,000) / 10,000,000 = 1.00.
Use the weighted average because the number of shares can change during the year. Diluted EPS also allows for options and convertibles that could add shares.
Where it is used
Assessing profitability per share
See earnings attributable to each share.
Tracking performance over time
Follow growth in earnings.
Valuation
Used in price-to-earnings comparisons.
How to improve it
Tips and common mistakes
- EPS can be lifted by buybacks without any profit growth.
- Compare over several years.
- Follow the accounting standard for calculation.
More Finance kpi library
Build better plans, faster
Join the waitlist for early access to curated insights, flexible templates, and rapid iteration across strategy, planning, and project management.