EPS is the company’s net income divided by the number of the outstanding shares of the company.
It is one of the most important measurement of the company profitability. It is used widely in the all industries: EPS is usually reported every quarterly every time when the company reports their company’s quarterly earning.
In simple terms: if the company is profitably for the quarter than it will report Positive EPS and if the company losses money in the quarterly then it will report negative EPS respectively.
The quarterly report of the EPs are very important for the short term movement of the company’s stocks, So we really want to look into picture of the EPS every quarter.
How EPS is calculated:
EPS= Net income (Earning) / Average outstanding shares
For example if the company has the net income of $15 millions and has an average of $10 million shares then its EPS will be $1.5.
So what is the significance of the EPS is that it shows how much money a company is making for its shareholders on its per share basis.