Metric · Earnings

Earnings Per Share (EPS) Explained

Q: What is the difference between EPS and diluted EPS?

Diluted EPS additionally accounts for shares that could potentially be newly created through options or convertible bonds. It's therefore usually somewhat lower than basic EPS.

Earnings per share (EPS) allocates a company's net income across each share outstanding. It's the base figure behind many other metrics, first and foremost the P/E ratio.

Updated 20266 min read

Formula

EPS = Net income ÷ Number of shares outstanding

PositiveProfitable

Just above 0Near breakeven

NegativeLoss per share

Guideline values, industry-dependent, illustrative

The formula in detail

The components of the formula at a glance.

Numerator

Net income

The after-tax profit from the income statement.

Denominator

Shares outstanding

The number of shares outstanding (basic or diluted).

Calculator

Enter your own figures and see the value instantly.

Net income (€m)Shares outstanding (m)

Result earnings per share

Positive earnings per share

3.0

The absolute EPS value can't be classified as 'good' or 'bad' across industries. It depends heavily on share price and the number of shares outstanding.

The trend usually matters more than the level: EPS growing over several years points to rising earnings power per share.

Share buybacks can raise EPS without the company's total profit having grown. Always look at the numerator (net income) alongside it.

Used in these strategies

Levermann Strategy (13 Criteria)The structured all-round check: 13 criteria, each +1, 0 or −1.Magic Formula: Value + QualityGood companies at cheap prices: two factors, one score.

Frequently asked questions

Why isn't a high EPS automatically good?

Because EPS depends on the number of shares outstanding. Two companies with identical total profit but a different share count report different EPS values without being differently profitable.

What is the difference between EPS and diluted EPS?

Ready to start?

Screen all stocks by this metric

Filter the entire market by this and dozens of other metrics, in a free account.

Not investment advice. This explanation is for informational purposes only and does not constitute a recommendation to buy or sell securities.

More metrics

What Is a Good P/E Ratio?How to Calculate Dividend Yield Return on Equity (ROE) Explained Free Cash Flow (FCF) Explained Net Debt / EBITDA Explained EV/EBIT Explained Return on Assets (ROA) Explained EBIT Margin Explained Gross Margin Explained Price-to-Book Ratio (P/B) Explained PEG Ratio Explained Equity Ratio Explained Return on Sales (Net Margin) Explained EBITDA Margin Explained Current Ratio Explained Debt-to-Equity Ratio Explained EV/EBITDA Explained Dividend Payout Ratio Explained How to Calculate Revenue Growth