Earnings Per Share (EPS)

Earnings per share is net income divided by the number of shares outstanding — the slice of annual profit attached to each individual share. A company earning $250M with 100M shares out earns $2.50 per share.

Two versions matter. Basic EPS uses shares actually outstanding; diluted EPS adds shares that could exist from options, warrants, and convertibles, so it is always the same or lower. Analysts and the P/E ratio almost always use diluted.

EPS is the number Wall Street sets estimates against every quarter. A company "beats by $0.05" when reported EPS comes in five cents above the consensus estimate, and the stock's reaction usually keys off that gap rather than the absolute figure.