What is Earnings Per Share (EPS)?

Published by StockScore Editorial • Reading time: 4 mins

Earnings Per Share (EPS) is a key metric indicating a company's profitability on a per-share basis. It tells you how much net profit is allocated to each outstanding share of common stock.

How is EPS calculated?

            EPS = Net Income / Total Outstanding Shares
          

For instance, if a company makes a net profit of ₹100 Crores and has 10 Crore shares outstanding, its EPS is ₹10. This means for every share you hold, the company earned ₹10 in profits this year.

Basic vs. Diluted EPS

Basic EPS only counts currently outstanding common shares. Diluted EPS accounts for all potential convertible securities (like stock options, warrants, or convertible debt) that could eventually increase the share count. Value investors always focus on Diluted EPS as a safer metric.