What's the EPS?

At the Stock Market, EPS means Earnings per Share.

The Earnings per Share is being calculated by dividing the total profit of a company by the number of shares. If a company makes 10 million USD profit and has 1 million shares, the Earnings per Share (EPS) is at 10 USD.

 

How is the EPS used?

In practice the Earnins per Share (EPS) is an important figure to calculate many financial ratios used for the valuation of stocks. The EPS is used to get this ratios:

The EPS shows the real earnings for each and every share and is crutial to value the stockprice of a company. The total profit is a nice headline but much more important is the EPS, because the number of shares can change over time. Share-Buybacks are reducing the number of shares which usually leads to a higher EPS. A capital increase does the opposite: it expands the number of shares, the EPS goes down.