EPS earnings per share
Earnings per share (EPS) is a company's net profit divided by the number of shares outstanding. It comes in two forms: basic, which uses today's share count, and diluted, which also counts the shares that could come into existence through options, convertibles or compensation plans. Diluted is the one worth looking at, because it reflects what each share would be entitled to if everything outstanding were exercised.
How it is calculated
EPS = net income attributable to ordinary shareholders ÷ weighted average number of shares. With €200M of profit and 100 million shares, EPS is €2.00 per share. The share count is a weighted average over the period, not the closing balance: if the company issues shares in October, those new shares only count for one quarter. That is why a buyback lifts EPS even when profit does not move (there are fewer people to divide it among) and an issue lowers it. There are two versions: basic, with the shares that exist, and diluted, which adds the ones that will appear if options and convertibles are exercised. Diluted is always equal or lower.
The figures in the example are invented and rounded so the arithmetic can be redone by hand. They are not data from any real company.
What it is not
It is not money you receive: what you get paid is the dividend, and it is usually a fraction of EPS. It is not cash either: net income carries depreciation and accounting entries that never moved a euro. And mind which version you are reading: reported EPS under IFRS or US GAAP and the company's own «adjusted» EPS can differ a lot, and mixing one with the consensus for the other is what manufactures earnings surprises that never happened.
In the terminal
Income statement, balance sheet and cash flows by fiscal year or quarter, with the change in every line and its trend.
See the full glossary · What the Celsmar financial terminal is
Definition for informational purposes. It is not financial advice nor a recommendation to buy or sell.