EPS Calculation and Stock Selection Practical Guide: Master the Core Secrets of Earnings Per Share in One Article

DefiOldTrickster · 2026-01-06T11:33:21+00:00

Earnings Per Share (EPS) is an important indicator for evaluating a listed company's profitability. It is calculated by dividing the company's net profit by the number of outstanding shares. A high EPS indicates that the company can generate more returns for shareholders. This article will delve into the calculation of EPS and its application in investment decisions.

DefiOldTrickster

2026-01-06 11:33:21

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When analyzing the financials of listed companies, Earnings Per Share (EPS) is one of the most commonly used evaluation tools by investors. This indicator not only reflects a company’s profitability but also helps us make smarter investment decisions. So how exactly is EPS calculated? And how can we flexibly use it to screen for quality targets? This article will comprehensively break down this key indicator from basic concepts to practical applications.

Seeing the essence through numbers: What does EPS actually represent

The full English name of EPS is Earnings per Share, simply put, it indicates how much net profit corresponds to each share of the company’s outstanding stock.

Imagine a company earning 100 million yuan in profit, with 10 million shares outstanding. Then each share corresponds to a profit of 10 yuan. The higher this number, the more profit the company has generated for shareholders with the same amount of capital.

For investors, EPS is an important reference for judging a company’s value. If a company can generate more profit with less capital, each dollar invested by shareholders yields a higher return. Such a company is naturally more attractive. For example, Apple Inc. (AAPL.US), from 2019 to 2024, saw its EPS steadily increase from about $2.97 to about $6.05, reflecting the company’s improved profitability through business expansion and profit growth.

Three key elements of EPS calculation

Basic calculation formula

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