Earnings Per Share (EPS)

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Reuters  Oct 25  Comment 
* Meta Financial Group, Inc reports results for 2016 fiscal fourth quarter and fiscal year
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newratings.com  Oct 25  Comment 
HARTFORD (dpa-AFX) - United Technologies Corp. (UTX) announced the company now expects slightly higher organic sales growth and increased the low end of its adjusted EPS outlook by ten cents and now expects 2016 EPS of $6.55 to $6.60, up from...
newratings.com  10 hrs ago  Comment 
newratings.com  Oct 25  Comment 
INDIANAPOLIS (dpa-AFX) - Drug maker Eli Lilly and Co. (LLY) reported Tuesday lower profit in its third quarter, despite higher revenues. Adjusted earnings per share and top line missed analysts' estimates. Further, for fiscal 2016,...
SeekingAlpha  Oct 25  Comment 
Benzinga  Oct 25  Comment 
Merck & Co., Inc. (NYSE: MRK) delivered better than expected results for the third quarter. The company also updated its full year outlook, sending the stock higher in pre-market trading. Merck reported GAAP EPS of $0.78 and adjusted EPS of...
SeekingAlpha  Oct 24  Comment 


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Earnings per share is a company's total earnings divided by the total number of shares outstanding. It is calculated using annual earnings, usually after interest and taxes and after deducting the preference shares dividends, so as to compute the portion of total profit which is attributable to the ordinary shareholders. In this case, total earnings would be divided by the total number of ordinary shares outstanding.

There are three types of EPS numbers:

  1. a trailing EPS (calculated using the previous year's earnings),
  2. a current EPS (uses the current year), and
  3. forward EPS (a projection for the coming year).

Moreover, different accounting policies regarding the handling of new issue of ordinary shares, have led to the need of several computation approaches to the EPS ratio, in order to reflect in the best way possible the appropriate information for the users-stakeholders of the firm being analyzed. For this reason, there is the computation of the Basic EPS, the EPS Adjusted reflecting any bonus issue or rights issue or option/warrants exercise and the Diluted EPS - DEPS which reflects the convertible bonds or shares to ordinary shares (the approaches are being determined by the accounting policies in effect). Existing shareholders can look at the DEPS to see the effect on current profitability of commitments already entered into to issue ordinary shares in the future.

What is important, is that very often EPS is used as a considerable tool-indicator of a firm's performance. It measures performance from the perspective of investors and potential investors.Additionally, it shows the amount of earnings available to each ordinary shareholder, so that it indicates the potential return on individual investments. These results can be achieved by comparing the EPS of either different entities or the same entity's in different accounting periods, or even better, using both. Sometimes, the trend in EPS may be more accurate performance indicator than the trend in profit, though it is based on profit on ordinary activities after taxation.

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