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