Earnings Per Share (EPS)
EPS is a company's net profit divided by its number of outstanding shares.
Earnings per share tells you how much profit the company generated for each share in issue. Trailing EPS uses the last twelve months of reported earnings, which is the figure shown on our stock pages.
EPS is the denominator of the P/E ratio and the base from which dividends are paid, so it sits at the centre of most valuation work. Rising EPS over time generally reflects a growing, more profitable business, though buybacks can also lift EPS by shrinking the share count.
Example
A company with £1bn of net profit and 500 million shares outstanding has an EPS of £2.00.
Further Reading
Philip Fisher's growth-investing classic on evaluating management and moats.
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Thomas Ittelson's plain-English walkthrough of how earnings figures are actually built.
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