Primary Earnings Per Share (EPS)


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.

BREAKING DOWN '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.

  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Diluted Earnings Per Share - Diluted ...

    Diluted Earnings Per Share (or Diluted EPS) is a performance ...
  3. Trailing EPS

    The sum of a company's earnings per share for the previous four ...
  4. Cash Earnings Per Share - Cash ...

    A measure of financial performance that looks at the cash flow ...
  5. Rolling EPS

    A measure of a company's earnings per share based on the previous ...
  6. Maturity

    The period of time for which a financial instrument remains outstanding. ...
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