Investopedia

Continue to Site »

Primary Earnings Per Share (EPS)

Filed Under » ,
Dictionary Says

Definition of 'Primary Earnings Per Share (EPS)'

One of two methods for categorizing shares outstanding. The other method is fully diluted earnings per share (EPS). The term "basic EPS" is more commonly used instead of "primary EPS." Basic EPS is the simpler method to categorize outstanding shares, as it uses the number of shares currently available for trading. To calculate basic EPS, divide net income by the number of shares outstanding.
Investopedia Says

Investopedia explains 'Primary Earnings Per Share (EPS)'

Diluted EPS is more complicated to compute, but it is considered more conservative because it takes into account all the outstanding convertible shares, warrants and options that could potentially be converted to shares that are able to be traded. If none of these financial instruments are outstanding, diluted EPS and primary EPS will be equal.

EPS can be calculated in many different ways depending on the accounting methods and assumptions the company uses; investors taking EPS into account in any decision-making process should understand how the EPS figure they are using was calculated.

Articles Of Interest

  1.

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.

  2. 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.

  3. How To Evaluate The Quality Of EPS

    Companies can manipulate their numbers, so you need to learn how to determine the accuracy of EPS.

  4. Getting The Real Earnings

    EPS helps investors analyze earnings in relation to changes in new-share capital.

  5. Assess Shareholder Wealth With EPS

    Find out if management is doing its job of ceating profit for investors.

  6. Diluted EPS

    Find out how and why this performance metric is so valuable in analyzing stock.

  7. Warrants

    Learn more about this derivative security.

  8. What is the difference between weighted average shares outstanding and basic weighted average shares?

    Outstanding shares refers to stock that is currently held by investors, including shares held by the public, and restricted shares that are owned by company officers and insiders. The number ...

  9. Are High-Yield Bonds Too Risky?

    Despite their reputation, the debt securities known as "junk bonds" may actually reduce risk in your portfolio.

  10. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index or security. Common underlying instruments include: bonds, commodities, ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center