Calculate the total portion of a companies profit that is allocated to 1 share held by the company shareholders. Enter the net income, dividends, and total shares owned and this earnings per share calculator will determine the EPS.

Earnings per share is one of the most important statistics in determining the value and profit of a stock. Many investors use earnings per share as their guiding principal for purchasing stock.

## Earning Per Share Formula

The following formula is used to calculate the earnings per share or EPS.

EPS = (net income – dividends on preferred stock) / outstanding common shares

- Where EPS is earning per share
- Net income is the total profit of the company (not total revenue)
- Dividends are only on preffered stocks
- Outstanding common shares is the current or average number

This EPS formula is only used when calculating the EPS of common stocks. As noted in the equation above, preferred stocks play by a different set of rules. Preferred stocks receive dividends that common stocks do not. These dividends are taken directly from the profit of the company.

## How to calculate EPS

Below is an example of how you might calculate EPS on a given stock.

First, we need to determine the net income, or total profit of the company. This is done by subtracting the total costs from the total revenue. Let’s assume for this example the company has a total profit of $1,000,000.00.

Next, we need to calculate the dividends on the preferred stock. This is typically a percentage of the total profit. For this example we will assume 5% dividends, which would give us $50,000.

Finally, we need to calculate the total number of outstanding common shares and plug our numbers into the equation. We will assume 50,000 shares.

$1,000,000-$50,000/50,000 = $19.00 EPS

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