Investing Basics

What Is Earnings Per Share (EPS)?

Earnings per share (EPS) is a company’s net profit divided by the number of its outstanding common shares. It shows how much profit is attributable to each share and is a key input in the price-to-earnings (P/E) ratio.

Formula

EPS = (net income − preferred dividends) ÷ weighted average common shares. A company earning 10 million with 5 million shares has EPS of 2.

Basic vs. Diluted

Diluted EPS assumes that options and convertible securities are turned into shares, which usually gives a slightly lower figure.

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🔗 Related Terms

Price-to-Earnings Ratio (P/E) Net Profit Margin Market Capitalization Dividend

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.