earnings per share


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Earnings per share (EPS)

A company's profit divided by its number of common outstanding shares. If a company earning $2 million in one year had 2 million common shares of stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term. The one-year (historical or trailing) EPS growth rate is calculated as the percentage change in earnings per share. The prospective EPS growth rate is calculated as the percentage change in this year's earnings and the consensus forecast earnings for next year.

Earnings per Share

In a given fiscal year, a publicly-traded company's profit divided by the number of shares outstanding. This is considered the single most important aspect in determining a share's price and value, because the calculation of earnings per share shows the amount of money to which a shareholder would be entitled in the event of the company's liquidation. In general, earnings per share applies only to common shares. It is calculated thusly:

Earnings per share = (Net income - Preferred dividends) / Average shares outstanding.

earnings per share (EPS)

An earnings measure calculated by subtracting the dividends paid to holders of preferred stock from the net income for a period and dividing that result by the average number of common shares outstanding during that period. EPS is the amount of reported income, on a per-share basis, that a firm has available to pay dividends to common stockholders or to reinvest in itself. As with other financial measures, EPS can vary with differing accounting techniques; therefore, reported EPS may give a very misleading signal as to how the firm is really doing. Also called income per share, net income per share. See also basic earnings per share, diluted earnings per share.
Case Study Companies often release several versions of earnings per share to the investment community. In October 2001 telecommunications company Convergys Corporation, a 1998 spinoff from Cincinnati Bell, announced its third-quarter operating earnings rose 12% to 31¢ per share from the prior year's 27¢ per share. At the same time the firm announced that cash earnings per share, excluding goodwill amortization and special items, increased 13%, to 35¢ from 31¢ during the year earlier period. However, earnings per share calculated according to generally accepted accounting principles specified by the Financial Accounting Standards Board were reported as 2¢ per share, down over 90% from 27¢ per share a year before. The shareholders' quandary is determining which measure of earnings per share most accurately represents the company's performance. Companies would like you to focus on the earnings report that is most favorable to the company and its management. In this instance investors must have considered operating income the most important measure of the firm's performance because Convergys stock closed up $1.80 at $28.00. A month later the stock was trading in the low 30s.

Earnings per share (EPS).

Earnings per share (EPS) is calculated by dividing a company's total earnings by the number of outstanding shares.

For example, if a company earns $100 million in a year and has 50 million outstanding shares, the earnings per share are $2.

Earnings per share can also be calculated on a fully diluted basis, by adding outstanding stock options, rights, and warrants to the outstanding shares.

The results report what EPS would be if all of those options, rights, and warrants were exercised and the company had to issue more shares to meet its obligations.

Earnings and other financial measures are provided on a per share basis to make it easier for you to analyze the information and compare the results to those of other investments.

earnings per share

NET PROFIT after tax accruing to the ordinary shareholders in a JOINT-STOCK COMPANY, divided by the number of ORDINARY SHARES. Comparison of earnings per share with DIVIDEND per share indicates the proportion of earnings paid out as dividends and the proportion retained in the business.

earnings per share

NET PROFIT after tax accruing to the ordinary shareholders in a JOINT-STOCK COMPANY, divided by the number of ORDINARY SHARES.
References in periodicals archive ?
For its third quarter, earnings per share of 83 cents improved year over year and beat the consensus by approximately 51%.
Analysts have boosted earnings per share expectations for 2007 by approximately 7.
NYSE: NTG) recently reported second-quarter earnings per share of 50 cents, which represented a new record for the company.
This press release contains forward-looking statements regarding sales, earnings per share, free cash flow, and operating income.
With the execution of this agreement, the company now expects fiscal year 2007 earnings per share in the range of $3.
With the execution of this agreement, we now expect fiscal year 2007 earnings per share to reflect year-over-year growth of about 18%, double our projected organic revenue growth rate.
Earnings per share increased year-over-year and came in 19% ahead of Wall Street expectations.
NYSE: CAE), another Zacks #1 Rank (Strong Buy) name, recently reported fiscal second-quarter earnings per share of 91 cents.
Adjusted earnings per share of 13 cents eclipsed the consensus estimate by approximately 18% and outperformed the previous year's result.
NYSE: HS) raised its earnings per share estimate for 2006 and maintained its revenue guidance.