Glossary

Earnings per share (EPS) is a financial metric that represents a company's net income divided by the number of outstanding shares of its common stock. 📊

It's a widely used measure of profitability, as it shows how much money the company is making for each outstanding share. Investors often use EPS to compare the profitability of different companies within the same industry.

For example, if a company has a net income of $10 million and 5 million outstanding shares, its EPS would be $2 ($10 million / 5 million).

Fun fact: When companies report their financial results, they often announce both the basic EPS and diluted EPS. 🧮 Diluted EPS takes into account potential increases in the number of shares, such as from stock options or convertible securities. This provides a more conservative estimate of a company's earnings power.