Earnings Per Share Calculator (EPS)

The formula

How to calculate earnings per share

Earnings per share is profit sliced by share count. It is the denominator of the price/earnings ratio and the figure quarterly results are judged against, which is why so much attention lands on it.

Use the weighted average share count rather than the closing figure. A company that issued shares in November had far fewer shares in issue for most of the year, and the year-end count would understate EPS.

Fill in the following:

• Net income
• Preferred dividends — paid before ordinary shareholders see anything
• Shares outstanding — use the weighted average over the year, not the year-end count

Everything recalculates as you type, and the numbers in the address bar update with it, so a link to this page carries your figures with it.

Worked example

Here is the calculation with the starting values:

• Net income: 48,000,000
• Preferred dividends: 3,000,000
• Shares outstanding: 15,000,000

That gives:

• Earnings per share: 3
• Earnings available to ordinary shares: 45,000,000
• Preferred takes: 6.25 %

Reading the result

EPS is only comparable to the same company's history. Across companies it is meaningless on its own — a £10 EPS is not better than a £1 EPS, it just means fewer shares exist. Growth in EPS is what carries information.

Where this goes wrong. Buybacks flatter EPS without the business improving. If profit is flat and the share count falls 8%, EPS rises 8% — real for a shareholder, but not the same as growth in earnings.