EPS is calculated by taking a company’s net income and dividing it by the number of outstanding shares. It shows how efficiently a company turns its profit into value for shareholders. A higher EPS generally means the company is generating more profit per share, while a lower EPS suggests weaker earnings.
Companies report EPS every quarter and every year. There are two common versions:
EPS helps investors understand profitability on a per-share basis, making it easier to compare companies of different sizes. It is also used in valuation metrics like the price-to-earnings (P/E) ratio and is a key metric during earnings season.
EPS can rise or fall for many reasons — changes in revenue, costs, share buybacks, or new share issuance. Because of this, analysts look beyond the number and study the underlying financial drivers to understand why EPS changed.
EPS helps investors evaluate profitability, compare companies, and track performance over time. It also influences share prices, analyst ratings, and market expectations.
Basic EPS uses only existing shares. Diluted EPS includes all shares that could exist in the future, such as those from employee stock options or convertible securities. Diluted EPS gives a more conservative view because it assumes more shares may enter the market, spreading profit across a larger number of shares.
EPS can increase if the company reduces the number of shares through buybacks. Even if total earnings do not grow, fewer shares mean a higher EPS. This is why analysts check both earnings trends and share count when evaluating EPS changes.
Analysts look at past EPS trends, expected future earnings, and market conditions to forecast EPS for upcoming quarters. These forecasts influence price targets and P/E ratios. EPS is central to valuation because it links company profit directly to shareholder value.
A company earns $50 million and has 10 million shares outstanding. Its EPS is $5. If it issues more shares or earnings change, the EPS will adjust accordingly.
FinFeedAPI’s SEC API provides the key numbers needed to calculate EPS — net income, basic shares, and diluted shares — all directly from official filings. This makes it easy to track earnings trends, compare companies, and monitor profitability using consistent, reliable data.
