Glossary
Earnings per share (EPS)
A company’s profit divided by its number of shares, showing how much profit is attributable to each share.
Earnings per share is net income, minus any preferred dividends, divided by the weighted average number of common shares outstanding. Basic EPS uses the shares that exist; diluted EPS also counts shares that could be created from options, warrants and convertible securities.
Companies often report two versions: one under standard accounting rules (GAAP in the US) and an adjusted figure that excludes items management considers one-off. The two can differ a lot, so it helps to check which one a headline uses.
In earnings season, the reported EPS is usually compared with analysts’ consensus estimate. A “beat” or “miss” describes that gap, not whether the company was profitable.
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