What is EPS (earnings per share)?

A company’s earnings per share is its net profit minus its preferred dividends divided by its total number of outstanding shares. It shows how much of a company’s revenue could be distributed to investors. A high or increasing EPS is taken as a good sign by investors. On the other hand, a low or declining EPS can often deter investors as it could be an indicator of a downturn in a company’s performance.

EPS = Net Profit - Preferred Dividends / No. of outstanding shares

Please note that financial analyses and ratios should not be looked at in isolation when making investing decisions.