Want to Know How Much A Company Made? Look at EPS!

Earning per Share(EPS) is to determine how much money the company makes.

It measures the shareholder returns for every shares invested. This is the most basic indicator because no matter how good you think a corporation is or how much you love its CEO, if the company is not earning money, eventually its stock price will fall.

EPS = Net Profit - Preference Dividens / No. of Ordinary Shares

Exp: Company A has $100,000 profits for the year with 1 million of outstanding shares. The EPS would be $0.10 (100,000/1,000,000).

TIPS:
If a company is earning more money, it obviously should be rewarded with a higher stock price or higher dividend payout (depending on its policies). That's why it's important to look at the history and forecast of company's EPS. Companies that grow (EPS) by more than 15% is the picked.