Financial Terms / E - F / Earnings per Share (EPS)

Earnings per Share (EPS)

The Earnings per Share (EPS) of a company is calculated by dividing the net profit of a company by the number of shares outstanding. For example, if a company earned $100 million in profit in the last financial year and has issued one million shares, then the EPS for that particular company is 100. 

Investors use the EPS as one of the metrics to judge a company's financial strength. Specifically, it is used as a yardstick to show a company's profitability. A positive EPS means the company has a positive net profit and vice versa.