Skip to content

Earnings per share calculator

By Jude Wallis

Earnings per share is net income divided by the number of shares outstanding. $10,000,000 of net income across 2,000,000 shares is $5 of EPS. $2,400,000 across 800,000 shares is $3.

Earnings per share

$5.00

$10,000,000.00 of net income across 2,000,000 shares.

EPS
$5.00
$

Put this on a class page: one iframe, free, for Google Sites, Canvas, WordPress or Notion.

On this page

The formula

EPS=net incomeshares outstanding\text{EPS}=\frac{\text{net income}}{\text{shares outstanding}}

Net income is profit after tax and after any preferred dividends. Shares outstanding is usually the weighted average over the period rather than the count on the last day.

A slice of profit, not a payment

$5 of EPS does not mean $5 arrives per share. It means each share is entitled to that much of the year's profit, most of which typically stays in the business. The part that is actually paid out is the dividend, and the ratio between them is the payout ratio.

That distinction is what makes EPS a measure of the business rather than of the shareholder's cash. The payout ratio calculator measures how much of the $5 is sent out.

The share count is the moving part

Net income gets all the attention and the denominator does the quiet work. Buying back shares raises EPS with no change in profit at all, because the same $10,000,000 is divided among fewer holders. Issuing shares does the reverse.

This is why EPS growth and profit growth are different claims. A business whose profit is flat can report rising EPS for years through buybacks, and the stock split calculator shows the mechanical version of the same effect in the opposite direction.

Basic against diluted

Basic EPS uses the shares that exist. Diluted EPS also counts options, convertible notes and anything else that could become a share, which lowers the figure. Companies report both, and the diluted number is the more conservative of the two.

The gap between them is worth noticing on its own: a wide gap means a large claim on future profit already exists in a form that has not turned into shares yet.

What EPS feeds

Almost every per share ratio starts here. Price divided by EPS is the P/E ratio, EPS divided by price is the earnings yield, and EPS is one of the two inputs to the Graham number. Getting the share count right therefore matters well beyond this page. Earnings per share covers the term itself. This is educational material, not financial advice.

Worked examples

\$10,000,000 of profit across 2,000,000 shares

A company earns $10,000,000 after tax and has 2,000,000 shares outstanding. What is EPS?

  1. Divide profit by shares: 10000000/2000000=510000000 / 2000000 = 5.
  2. Each share is entitled to 5 of the year's profit.

EPS is $5 a share, from $10,000,000 of net income and 2,000,000 shares.

A smaller company with fewer shares

Net income is $2,400,000 and there are 800,000 shares outstanding.

  1. Divide: 2400000/800000=32400000 / 800000 = 3.
  2. A quarter of the first company's profit, across a much smaller share count.

EPS is $3 a share on $2,400,000 of net income and 800,000 shares.

Reading EPS growth as profit growth

EPS can rise while profit stands still, because buybacks shrink the denominator. On $10,000,000 of net income, retiring a tenth of the 2,000,000 shares lifts EPS without earning an extra cent. Check the share count before crediting the business.

Common questions

Which share count should be used?

The weighted average over the period, which is what reported EPS uses, rather than the count on the final day.

Why is diluted EPS lower?

Because it counts options and convertibles that could become shares, spreading the same profit over more of them.

Is this financial advice?

No. It is educational material for the earnings per share identity.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.