Earnings per Share

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Earnings per Share

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.