Earnings Per Share (EPS)

Formal

Stands for ‘Earnings Per Share’. Simply the earnings of a company divided by the shares in issue. Needed for the P/E calculation. If 100% of the profits of a company were distributed to shareholders (dividend) then this would be the gross amount payable.

Real-world Example

A company reports $10M in net profit with 5 million shares outstanding. Its EPS is $2 per share, the amount of profit theoretically attributable to each share an investor holds.