Earnings Per Share Calculator

The earnings per share calculator calculates a company's profit divided by the outstanding shares of its common stock. The EPS calculator resulting in numbers and estimation serves as an indicator of a company's profitability.

What is EPS?

The earnings per share calculation (EPS) is the ratio between the net profits generated by a company relative to its number of common shares outstanding.

How to Calculate EPS?

To calculate earnings per share, you need to subtract the dividend yield from the net income and divide it by the average outstanding shares.

The formula for the earnings per share calculation is:

EPS = (Net income – Dividends on preferred stock) / Average outstanding common shares

Where:

• Net income = Total earnings (profit) of the company
• Dividends on preferred stock = Preferred stock is a class of assets that gives the shareholders priority over the common stock
• Average outstanding common shares = Number of shares currently held by the shareholders

You can determine a company’s financial position by the earnings per share calculator. The earnings per share calculations are critical indicators of a company’s current financial position with respect to the stock exchange.

Practical Example:

Let's suppose the net income of a company is $3.12 billion and the dividend on the preferred stock is equal to $200 million. The number of outstanding common shares is $333.4 million, then how to calculate earnings per share?

Solution:

Then to calculate earnings per share, we can use the formula:

EPS = (net income – dividends on preferred stock) / average outstanding common shares

Then how to calculate basic earnings per share:

EPS = ($3,120,000,000 – $200,000,000) / 333,400,000 = $8.76

The EPS value for this company is equal to $8.76, and the earnings per share calculator enable us to decide the earning per share.

Applications of Earnings Per Share:

There are various applications of the earnings per share calculation:

• To evaluate the company's value
• To search for investment opportunities
• To know the growth rate of a company
• To find ROI on our investments

Working of the Earnings Per Share Calculator:

It is easy to calculate earnings per share with our EPS calculator by the following steps:

 Input:

• Enter the Net Income and Dividend
• Enter the Number of Common Shares
• Tap calculate 

 Ouput:

• Earning per share 

FAQs:

What are Preferred Stocks?

Preferred stock is a type of equity that represents the ownership of a company and the right to claim income from the company's operations. 

What are Common Stocks?

The common stocks are generally floated in the market. The owner of the common stock can claim their profitability and voting right. To calculate EPS divide by the outstanding common stock.

What is the Dividend Yield of a Company?

The dividend yield is a financial ratio and it is the share price that the company pays out in dividends each year to its shareholders.

References:

From the source of investopedia.com: How is EPS calculated?

From the source of wallstreetprep.com: What is EPS