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How do I calculate EPS (earnings per share)?
Earnings per share (EPS) is a very common metric for evaluating the performance
of a company. Usually every quarter, each publicly traded company releases it's
earnings (profits) report. They will report the total earnings for the quarter
and you can look up the total number of shares outstanding for that company to
calculate EPS.
EPS* =
(Total Earnings) / (Number of Shares Outstanding)
Example:
Company XYZ reported $100 million in earnings.
You look up their Outstanding Shares (50 million) on a financial
website.
EPS = $100,000,000 / 50,000,000 shares = $2.00 per share
* NOTE - There are several variations of EPS, including
Diluted EPS,
Reported EPS, and Cash EPS. And each variation can be misleading, depending on
how the company or the website calculates the earnings (which can include or
ignore one-time charges, dividends, etc) and the number of shares (which
fluctuate throughout the quarter). So the EPS calculation we show above is just
a very simple version.
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