Earnings Per Share (EPS)
The Earnings Per Share (EPS) ratio is one of the most widely used measures of a stock's evaluation. At face value, the EPS ratio is a good measure of the stock, but if you are unaware of its limitations, it can be greatly misleading.
FORMULA: NET INCOME ÷ TOTAL SHARES OUTSTANDING = EARNINGS PER SHARE (EPS)
The higer the EPS, the better; thus, it might be a good tool to use when evaluating a company. Most investor's veiw EPS as an important tool in evaluating stocks. Most financial papers and journals report the EPS daily. It is also found in the company's annual reports (10-K & 10-Q).
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