Course 108: Learn the Lingo--Basic Ratios
Earnings Per Share
In this course
1 Introduction
2 Earnings Per Share
3 Market Capitalization
4 Profit Margins
5 Price/Earnings and Related Ratios
6 Price/Sales Ratio
7 Price/Book Ratio
8 Price/Cash Flow
9 Dividend Yield
10 The Bottom Line

Earnings per share (EPS) is a company's net income (typically over the trailing 12 months) divided by its number of shares outstanding. EPS comes in two varieties, basic and diluted. Basic EPS includes only actual outstanding shares of a company's stock, while diluted EPS represents all potential stock that could be outstanding with current stock option grants and the like. Diluted EPS is the more "conservative" number.

EPS = (Total Company Earnings) / (Shares Outstanding)

Although EPS can give you a quick idea of a company's profitability, it should not be used in isolation without also looking at cash flow and other performance metrics.

Next: Market Capitalization >>


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