Introdução
EPS (Earnings Per Share) is net profit divided by the number of shares. It is the metric most followed by analysts and investors because it measures how much each stock earns.
Explicação
EPS responds: "If the company distributed all of its net profit, how much would it earn per share?" There are two versions: Basic EPS (simple circulating shares) and Diluted EPS (includes options and convertibles).
Fórmula
Basic EPS = Net Profit / Outstanding Shares
Diluted EPS = Net Profit / (Shares + Options + Convertibles)
Exemplo
Apple 2023: - Net Profit: $100B - Shares: 16B - EPS = $100B / 16B = $6.25 If you buy 1 share of Apple, you "own" $6.25 in annual profit.
Como interpretar
Growing EPS = excellent (the company is more profitable per share). Declining EPS = problematic (dilutes value). Sustained EPS growth of 10%+ annually is a sign of a quality company. Compare EPS vs share price to calculate P/E Ratio. Red flag: EPS growing but net profit stagnant = artificial share buybacks.
Ideias-chave
- EPS = Net Profit / Shares
- Most followed metric on Wall Street
- Growing EPS = more value per share
- Diluted EPS includes options and convertibles
- 10%+ annual EPS growth = quality
- Red flag: EPS up but profit flat (buybacks)