EPS (Earnings Per Share) is a company's net income divided by its number of shares outstanding, showing how much profit each share represents.
EPS (¥) = Net Income ÷ Shares Outstanding
What it measures
EPS shows how much profit a company earned per share. It is one of the most widely referenced metrics in investment decisions and is also used in calculating PER (Price Earnings Ratio).
How to read it
Share buybacks reduce the number of shares outstanding, which can raise EPS even if net income stays the same.
Because EPS can be affected by one-off extraordinary gains or losses, it is often useful to look at the multi-year trend rather than a single year's figure.
This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.
Frequently Asked Questions
Does rising EPS mean the share price will go up?
Rising EPS is often seen as a sign of business growth, but share prices move on many other factors as well, including market expectations and interest rates, so an increase in EPS does not automatically translate into a higher share price.
What is the difference between EPS and net income?
Net income is the company's total profit; EPS divides that by the number of shares outstanding to give a per-share figure. EPS can be easier to compare across companies of different sizes (i.e., with different share counts).
How is EPS growth calculated?
EPS growth rate (%) = (current-period EPS − prior-period EPS) ÷ prior-period EPS × 100. Looking at the trend over several years, not just a single year, makes it easier to see whether growth is continuing at a steady pace.
