Investor Glossary-epsInvestor Glossary-epsInvestor Glossary-epsInvestor Glossary-epsInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

EPS

The HTML to link to this page
 

EPS is earnings per share, the net income a company makes in a given period for each outstanding share. EPS is perhaps the key measure of a company's financial success, because it reflects both the company's bottom line (the numerator) and the ownership interests (the denominator) over which earnings must be spread. EPS is also used to calculate the company's price-earnings ratio (ie, stock price divided by EPS), the most widely recognized valuation measure for determining whether a stock is fairly valued. Although the calculation of EPS would appear to be a simple matter of dividing net income by the number of shares, EPS computation is anything but straightforward. Under Statement of Financial Accounting Standard 128, the calculation of the weighted-average number of common shares outstanding (ie, the denominator for EPS) is often complicated. Furthermore, if the company has a complex capital structure with dilutive securities like options and warrants, the company has to calculate (again, with much difficulty) and present two EPS figures: a basic EPS, and a diluted EPS that recognizes the potential effect of dilutive securities.



Rate this EPS definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: quality assurance, minority interest, command economy, Zero Cost Collar, APR, annual return, Key Rate Duration, average price per share, ex-dividend date, phantom income, risk management, in escrow, EBITDA, diluted share, option premium, cancelled check, covered put, required rate of return, labor relations, VIX, balance sheet, current ratio, LIBOR, real GDP, 401a, debt service coverage, 1031 exchange, margin rate, 144a, liquidity ratio, class C shares, wholly-owned subsidiary, deferred tax, irrevocable trust, 1035 exchange, stock market close, deferred revenue, implied volatility, reverse mortgage, retained earnings, dividends payable, inflation, stock split, open position, limit order, ex-dividend, FICO score, FTSE, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use