Description
Earnings per Share (EPS) is a key financial metric used to measure a company's profitability and performance. It represents the portion of a company's net income attributable to each outstanding share of common stock. The formula to calculate EPS is simple: divide the company's net income by the total number of outstanding shares of common stock. EPS is an important indicator for investors as it provides insight into a company's ability to generate profits on a per-share basis, which is crucial for assessing its financial health and determining its value in the stock market. Higher EPS values generally indicate greater profitability and potential for shareholder returns, while fluctuations in EPS over time can reflect changes in the company's earnings performance. EPS is commonly used in financial analysis, comparison across companies within the same industry, and as a component of various valuation metrics such as the price-to-earnings (P/E) ratio.