Earnings per share (EPS) is a metric used to estimate how much money a company makes for each of its stocks. It gives insight into the company’s profitability by reflecting the amount of money that it makes for every share of its stock. It is calculated by dividing the company’s net profit by its total stock. Higher EPS is a sign that the company is more profitable.
Earnings per share = Net income / Outstanding sharesSuppose a company's net income is $5 billion and the number of shares outstanding is 1 billion.Basic earnings per share = (5 billion / 1 billion) = $5