A profitability metric calculated by dividing a company's net income by the number of outstanding shares. It represents the portion of profit allocated to each share of stock and is a key measure used in stock valuation.
Compound phrase combining 'earnings' (from Old English 'earnian' meaning to deserve/merit), 'per' (Latin for through/by means of), and 'share' (from Old English 'scearu' meaning portion). The metric became standardized in early 20th century as public stock ownership expanded.
EPS can be manipulated more easily than you'd think - companies can boost EPS without growing profits simply by buying back shares to reduce the denominator! This is why savvy investors always look at both basic EPS and diluted EPS, which includes potential shares from options and convertible securities.
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