Earnings Per Share (EPS)

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Forbes  3 hrs ago  Comment 
Analysts have become increasingly bearish on Harley-Davidson in the month leading up to the company's second-quarter earnings announcement scheduled for Tuesday, July 21, 2015. The consensus analyst estimate has moved from $1.41 a share to the...
newratings.com  8 hrs ago  Comment 
FAIRFIELD (dpa-AFX) - General Electric Company (GE) reported second-quarter earnings from continuing operations attributable to shareowners of $2.39 billion or $0.24 per share compared to $2.88 billion or $0.28 per share, previous year. Including...
SeekingAlpha  Jul 16  Comment 
Automotive World  Jul 16  Comment 
Nexteer Automotive, a global leader in intuitive motion control, has surpassed producing one million units of its energy efficient and cost effective brush electric power steering (BEPS) system on July 7. The addition of BEPS to Nexteer’s broad...
newratings.com  Jul 16  Comment 
WASHINGTON (dpa-AFX) - Sonoco (SON) reported preliminary second-quarter results and expects second quarter net earnings per share to be $0.61. Base earnings per share is estimated to be $0.66. On average, 12 analysts polled by Thomson Reuters...




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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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