Earnings per Share (EPS)

Definition

A company's profit attributable to common shareholders divided by its weighted average number of common shares. Diluted EPS also accounts for securities that could become shares.

EPS puts profits on a per-share basis. It can rise because the company earned more or because its average share count fell. Companies may also report diluted EPS to show the effect of additional shares that could be issued under arrangements such as employee stock options.

Example

Company A earns $2 million for common shareholders and has a weighted average of 1 million common shares. Its basic EPS is $2.