Glamsplainin' Earnings Per Share (EPS)
Earnings season is in full swing and we are breaking down the components of the earnings report. First up:
Earnings Per Share . Earnings per Share is considered by the glitterati to be the single most important thing in determining a stock’s price. It’s totally Gucci and helps an investor determine what the fans are willing to pay for a share based on a company’s current earnings. Technically, it is the portion of a company’s profit allocated to each outstanding share of common stock. It’s definitely a sign of a company’s profitability.
If you want to get your nerd on, earnings per share is calculated as:
EPS = Company’s Net Iincome – Dividends on Preferred Stock
Average Outstanding Shares