investing

Lingo every investor should know

EPS sets the course
Next
3 of 9
Back

Yes, EPS sounds a lot like a helpful navigational device you may have in your car. It isn't. But it nevertheless can steer investors in the right direction. EPS stands for earnings per share. Like ROE, it's a tool for measuring profitability. You get EPS by dividing the net income of the company by the number of its outstanding shares of common stock. Most public companies report their EPS on a quarterly and annual basis.

"EPS is a big one," says Richard Ferri, founder of Portfolio Solutions in Troy, Mich., and author of "All About Asset Allocation." "It tells you how much you are making per share."

Remember: The formula is dependent on profits and the number of shares. For instance, a company that earns $1 million and has one million shares outstanding has the same EPS as a company that earns $500,000 and has a half-million shares outstanding. In both cases, the EPS is $1.


 

 

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

How do I repay IRA loan?

Dear Dr. Don, Hello, I read your column about short-term, 60-day loans from an individual retirement account. How do you withdraw funds from an IRA? Can a person redeposit the funds back into the same IRA? Or can the money... Read more

advertisement

Blog

Sheyna Steiner

The King may defect to Canada

Burger King is in talks to buy Tim Hortons and will likely join the list of corporate expats. What does the tax inversion strategy mean for investors?  ... Read more

Partner Center
advertisement

Connect with us