Earnings Per Share (EPS) Calculator
Calculate Earnings Per Share with our free EPS calculator. Enter net income, preferred dividends, and shares outstanding to find basic EPS. Optionally provide the stock price to see the implied P/E ratio.
Earnings Per Share (EPS) is one of the most important metrics for evaluating a company's profitability. It represents the portion of a company's net income allocated to each outstanding share of common stock. The formula is: Basic EPS = (Net Income - Preferred Dividends) / Weighted Average Shares Outstanding. Preferred dividends are subtracted because they are not available to common shareholders.
EPS is the denominator in the P/E ratio and is closely watched by investors and analysts. Companies that consistently grow their EPS tend to see their stock prices rise. Analysts issue quarterly EPS estimates, and beating or missing these estimates often causes significant stock price movements. A company's EPS growth rate over time is a key measure of its fundamental performance.
Diluted EPS accounts for all potential shares that could be created from stock options, warrants, convertible bonds, and restricted stock units. It provides a more conservative view of earnings per share by assuming all dilutive securities are exercised. When evaluating a company, always look at diluted EPS rather than basic EPS, as it better reflects the true earnings available per share.