EPS
Earnings per Share · EPS
The portion of a company's net income attributed to each share outstanding.
What it is
EPS = Net Income / Shares Outstanding
EPS is the foundation of P/E calculation and a key profitability metric from the shareholder's perspective. Growing EPS means each of your shares "earns" more over time.
Diluted EPS accounts for potentially issued shares (options, convertible bonds) — a more conservative and accurate figure.
Companies can increase EPS in two ways: (1) growing earnings or (2) buying back shares (buybacks) — the latter without real business growth is less valuable.
Why track it
EPS is the basis of P/E valuation. Watch the EPS trend and whether it grows organically (from the business) or only through buybacks. EPS growing faster than revenue signals operating leverage — a good sign.