Earnings per share (EPS)

Page written by AI. Reviewed internally on January 26, 2024.


Earnings per share (EPS) is a financial metric that calculates the portion of a company’s profit allocated to each outstanding share of its common stock.

What is earnings per share?

It is often used as an indicator of a company’s profitability and is calculated by dividing the company’s net earnings by the number of outstanding shares. EPS provides insight into how much profit a company generates for each share of its stock, which can be useful for investors and analysts evaluating a company’s financial performance.

Earnings per share is calculated using the formula:

ESP = Net income / Number of outstanding shares

Example of earnings per share

Let’s consider a fictional company, XYZ Corporation, to illustrate earnings per share (EPS).

XYZ Corporation has a net income of R1 million for the fiscal year. The company has 500,000 outstanding shares of common stock.

ESP = R1,000,000 / 500,000 = R2

So, the earnings per share for XYZ Corporation would be R2. This means that for each share of common stock, the company earned R2 in profit during that fiscal year.

Ready to grow your business?

Clever finance tips and the latest news

delivered to your inbox, every week

Join the 70,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop No, stay on this page