Earnings Per Share (EPS)

Earnings per share (EPS) is the portion of a company’s profit allocated to each share of common stock. Earnings per share serve as an indicator of a company’s profitability.

EPS calculation

Earnings per share (EPS) = Net Earnings (profit) / Total Outstanding Shares

Increasing earnings per share causes your firm’s share price to rise because the profit being earned per share is increasing which increases the value to investors.

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