What is 'Earnings Per Share  EPS'
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
Calculated as:
When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.
BREAKING DOWN 'Earnings Per Share  EPS'
Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the pricetoearnings valuation ratio.
For example, assume that a company has a net income of $25 million. If the company pays out $1 million in preferred dividends and has 10 million shares for half of the year and 15 million shares for the other half, the EPS would be $1.92 (24/12.5). First, the $1 million is deducted from the net income to get $24 million, then a weighted average is taken to find the number of shares outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M).
An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment)  that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
For more on EPS read The 5 Different Types Of Earnings Per Share (EPS) and How To Evaluate The Quality Of EPS

Outstanding Shares
A company's stock currently held by all its shareholders, including ... 
Fully Diluted Shares
The total number of shares that would be outstanding if all possible ... 
Basic Earnings Per Share
A rough measurement of the amount of a company's profit that ... 
Interim Earnings Per Share
A measure of earnings calculated at a specified time, shorter ... 
Primary Earnings Per Share (EPS)
One of two methods for categorizing shares outstanding. The other ... 
Per Share Basis
A measure used in the financial world to illustrate the quantity ...

Investing
The Weighted Average Of Outstanding Shares
The quantity of a company’s outstanding shares changes when it issues new shares, repurchases or retires existing ones, or converts others. 
Investing
Getting The Real Earnings
EPS helps investors analyze earnings in relation to changes in newshare capital. 
Managing Wealth
Calculating Basic Earnings Per Share
Basics earnings per share measures the amount of net income earned per share of outstanding stock. 
Investing
The Basics Of Outstanding Shares And The Float
We go over different types of shares and what investors need to know about them. 
Investing
What's A Company’s Worth, And Who Determines Its Stock Price?
A company’s worth is the same as its market capitalization. Market capitalization is stock price multiplied by number of outstanding shares. 
Investing
What are Issued Shares?
Issued shares are the amount of authorized stocks a company’s shareholders buy and own. The annual report shows the number of outstanding shares. 
Investing
What Is The Difference Between EarningsPerShare And DividendsPerShare?
Here's a brief explanation of the difference between earnings per share and dividends per share. 
Investing
The 5 Types Of Earnings Per Share
A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not. 
Investing
Assess Shareholder Wealth With EPS
Find out if management is doing its job of creating profit for investors.

What is the weighted average of outstanding shares? How is it calculated?
The amount of shares outstanding in a company will often change due to a company issuing new shares, repurchasing and retiring ... Read Answer >> 
What is the difference between weighted average shares outstanding and basic weighted ...
Outstanding shares refers to stock that is currently held by investors, including shares held by the public, and restricted ... Read Answer >> 
What is the difference between earnings per share and dividends per share?
Learn what earnings per share and dividends per share are, how the two ratios are calculated and the main difference between ... Read Answer >> 
Why would I need to know how many outstanding shares the shareholders have?
Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens ... Read Answer >> 
What is the difference between authorized shares and outstanding shares?
Calculating financial ratios can help investors understand a company's financial position, but only when a knowledge of various ... Read Answer >> 
How do I calculate earnings per share with simple capital and complex capital structure?
Learn the difference between simple and complex capital structures and how the structure affects a company's calculations ... Read Answer >>