The portion of a company's profit allocates to each outstanding share of common stock.
EPS is widely used by investors, analysts, and financial institutions to evaluate a company's profitability and to compare it with other companies in the same industry. Higher EPS values generally indicate higher profitability and may be seen as positive by investors.
The formula for calculating EPS is:
EPS = (Net income - Dividends on Preferred Stock) / Average Number of Shares)