Earnings per share
EPS
Earnings per share is the slice of net profit that belongs to each share. It is the building block for the PE and PEG ratios.
Formula
EPS
EPS = Net Profit ÷ Number of Shares
Benchmark: Track the growth over 1, 3, and 5 years rather than the level
Reading the number
Picture a shop that earns ₹100 a year and has four equal partners. Each partner's share of the profit is ₹25. That is EPS with four shares.
On its own, the EPS number tells you little, because a company can have any number of shares. What matters is how EPS has grown over one, three, and five years, and how the share price compares with it. Use consolidated EPS, and use the adjusted figure after bonus issues or splits so that years remain comparable.
Indian example
Related ratios
Glossary terms
From the research
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