Earnings Per Share (EPS) tells you how much profit a company generates for each share of its stock. It is one of the most widely used metrics for evaluating a company's profitability.
Formula: EPS = Net Income / Total Outstanding Shares. If a company earns $10 million in net income and has 5 million shares outstanding, the EPS is $2.00.
A higher EPS generally means the company is more profitable. Investors compare EPS across companies and over time to assess growth. It is also a key input for the Price-to-Earnings (P/E) ratio.