Earnings per share expresses a company’s profit on a per-share basis, which makes profit comparable across companies of different sizes and across years in which the share count changed. It is the denominator in the P/E ratio and one of the most closely watched numbers in any results announcement.
Key takeaways
- Issuing new shares dilutes EPS even when total profit is unchanged.
- EPS growth matters more than the absolute figure.
- One-off gains can flatter EPS, check whether the profit is recurring.