|Note! This is not a diagnosis. The calculations that are provided are estimates based on averages.|
|Earning per share|
Earnings per share (EPS) is a statistic which is a quarterly or annual measure of public company income for the outstanding stock share. EPS is achieved through a quarterly or annual net revenue for a company and the amount of its outstanding stock shares.
EPS is a measure of the financial health of the company. It is the portions of the income of a corporation assigned to every outstanding share of the common stock.
Basic earnings per share is the amount to be credited to each share of a company's common stock.
Stock market is one of the major sources of investment that is received by public companies. When a company goes public, its profits and losses are shared by various people. Thus, it becomes more aggressive in its ventures as the potential for loss is distributed across a wide spectrum which doesn’t hurt anyone significantly.
However, the reason for aggressive ventures has to do with profits because those are also widely distributed and so there has to be bigger profit margins for more investments.
Sometimes the company buys back its shares at higher prices when it is doing exceptionally well in the market. At other times, it sells them at lower prices to encourage investment.
Thus, it is a positive sum game where company’s own ambitions for bigger investments and profits also end up benefitting its shareholders and vice versa.
If you invest on companies in share markets, you likely already own a significant number of shares. You can use Earnings per Share Calculator and check your shares’ real value with just a few keystrokes in real time. This tool would calculate EPS for you with Earnings per Share Formula.
People invest a lot of capital in the market to make good profits. Having proper knowledge of investments and EPS is therefore, crucial. If you are investing funds in the shares of a specific company, you ought to know about the earnings per share.
It is the percentage of a company's total profit distributed to all the shares bought by the company's shareholders. EPS is one of the most significant variables employed to find out the profitability of investment in a given share.
One of the methods to earn profits in the stock market is to compare the EPS values for a given company over a long period of time. You can also compare values for Earnings per Share of various companies working in the same industry to select the most profitable one to invest in their shares.
EPS only take common stock into account, the preferred stock does not influence the share values.
You can use the following formula to compute EPS:
Earnings per Share = (net income – surpluses on preferred stock) / average remaining common shares
Net income amounts to the sum of earnings of the company, calculated as the costs subtracted from the sum of revenue.
Payments on preferred stock; preferred stock is a class of resources that gives the shareholders preference over common stock.
Even though preferred stock gives a higher return and are more secure in the sense that if a company faces liquidation, its shareholders get their money first, they however, don't have voting rights.
Profits on preferred stock are typically the quarterly or monthly payments received by the shareholders.
Average outstanding common shares is the amount of shares held by the shareholders in the current time. The amount typically varies over time. For Example, the amount increases when the company issues more shares and decreases when it buys back its own shares.
Earnings per share formula is used in calculating earnings per share (EPS). The EPS calculation can be done either manually or online.
To find out the company’s net income, consider that it is $5 billion.
Compute the sum of profits on preferred stock. We can consider it to be $300 million.
You would have to determine the number of remaining/outstanding common shares for the given company. We can choose a number say; $450 million.
Let’s calculate earnings per share calculation using the EPS Formula:
EPS = net income – dividends or profits on preferred stock/average remaining or outstanding common shares
EPS = ($5,000,000,000 – $300,000,000) / 450,000,000 = $10.4
The EPS value for this particular company is equal to $10.4 but these are complex math calculations when done manually, not that they can’t be done manually but they are time consuming and time is money.
For this reason, ecalculator has developed EPS calculator that computes Earnings per Share for you in a split second using the EPS formula. All you have to do is put in the values of net income, dividends and common share and it will calculate the EPS for you.
We do not charge you for using this tool no matter how many times you use it nor do you have to register to the site to make calculations.
EPS is usually considered high if the earnings of a company surpass those of similar businesses in the same industry. Of instance, the sports drink market has been dominated dominated by Gatorade (a Pepsico brand) and beating its rivals with 75% (a huge earnings per share ratio) stake in this niche market.