How is EPS Calculated - EPS Formula and Example With the Earnings Per Share meaning clarified, let us take a look at the mathematical formula for its calculation: EPS = (Net income - Preferred dividends) / Average outstanding shares Let us understand the EPS calculation with the help of an example. Learn more about earnings per share, how to calculate earnings per share and why EPS matters. Earnings per share or EPS is that share of a company’s profit that is distributed to each share of stocks. Know more about its calculation, types, importance, and more. Definition Formula Types of EPS Basic vs Diluted Limitations What Is a Good EPS ? P/E and EPS Takeaway Earnings per share , or EPS , is a simple calculation that shows how much profit a company can generate per share of its stock. It's calculated by dividing earnings by outstanding shares, which you can do either quarterly or annually, like so: EPS = total earnings / outstanding shares EPS is one of the most critical metrics impacting a stock's price. When EPS increases year-over-year, the ...
