Earnings Per Share (EPS)

The earnings per share (or EPS) of a company is the total earnings (profit after tax) divided by the number of shares in issue. So if a company earned £200m profit after tax and the number of shares in issue is 500m then the EPS is 40p per share. From a shareholders perspective the higher thhis value the better, and if the EPS is on a rising trend this is also a good sign.

The earnings per share can also be expressed on a 'diluted' basis, where the figure is revised to reflect if all 'dilutive' events were to take place. For example the exercising of share options and warrants or the convertion of debt into equity at a future date. EPS is used in the Price/Earnings Ratio calculation.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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