.svg)
.svg)
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
Earnings per share is the portion of a company’s profit that is allocated to one share. It is calculated by dividing total net profit by the number of outstanding shares. It shows how much profit is earned per share.
Earnings per share provides insight into profitability per individual share.
Investors use earnings per share to compare companies. If two companies have the same total profit, but one company has fewer shares outstanding, then the earnings per share will be higher. Rising earnings per share may indicate growth or efficiency, while a decline may point to lower profit or dilution due to additional shares being issued. Earnings per share is often used when calculating the price earnings ratio.
Short example:
Suppose a company makes €5,000,000 in profit and has 1,000,000 shares outstanding. The earnings per share is then €5.
If the same company makes €6,000,000 in profit with the same number of shares, the earnings per share increases to €6. Investors then see that earnings per share has increased.
Disclaimer: Investing involves risks. Our analysts are not financial advisors. Always consult a professional advisor when making financial decisions. The information and tips provided on this website are based on the personal insights and experience of our analysts and are intended for educational purposes only.
