The term earnings per share (EPS) denotes a measure used to find the value which a public company delivers to its shareholders. EPS indicates the amount of profit which each share making up the company earns over a given time frame.
Earnings per share is found by dividing a company’s profit (net income minus preferred stock dividends) by the number of ordinary shares which form its outstanding stock (stock held by shareholders as opposed to treasury stock).
This measurement provides a good indicator of the intrinsic value of shares and the dividends which shareholders can expect to receive from a company.
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