Earnings per share

A company's profit divided by its number of shares. It's the most common way to measure profit, and the number Wall Street compares with its forecasts each quarter.

Also called: EPS, earnings per share (EPS).

Related terms

  • Valuation: How expensive a stock is compared with what the company earns or might earn. A common measure is the price-to-earnings (P/E) ratio: the share price divided by yearly earnings per share.
  • Guidance: A company's own forecast of its future results, such as next quarter's sales or this year's spending. Stocks often move more on guidance than on past results.
  • Dilution: When a company creates and sells new shares, each existing share owns a smaller slice of the company. That shrinking of everyone's slice is called dilution.

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