Calculate earnings per share (EPS) in both basic and diluted forms. Enter net income, preferred dividends, and share counts to determine how much profit is attributable to each share of common stock. Compare basic vs diluted EPS and calculate the P/E ratio.
Earnings Per Share (EPS) is the single most-watched profitability metric for publicly traded companies. It tells you how much profit the company earned in the period attributable to each share of common stock outstanding. A company that earns $100 million in net income with 50 million shares outstanding has $2 of EPS — for every share you own, $2 of profits accrued to you during the period (whether distributed as dividends or retained for growth).
EPS appears in two flavors. Basic EPS uses just the actual shares outstanding. Diluted EPS includes all potential additional shares from stock options, restricted stock units (RSUs), convertible bonds, warrants, and other "dilutive securities" that could create new shares if exercised. Diluted EPS is always equal to or lower than basic EPS — the additional shares dilute earnings per share. For tech companies with lots of employee stock options, the gap between basic and diluted EPS can be 5–15%; for mature companies with few options, often just 0–2%.
This calculator computes both forms of EPS and the Price-to-Earnings (P/E) ratio using diluted EPS. The P/E ratio is the stock price divided by EPS — how many years of current earnings the stock price represents. Use it for fundamental stock analysis, evaluating earnings reports, comparing companies on profitability per share, and screening for value or growth characteristics. EPS is widely available on free financial websites (Yahoo Finance, Google Finance, the company's investor relations page), so the calculator is primarily useful when you want to compute EPS from underlying earnings and share data.
Net income: $50B. Preferred dividends: $0. Weighted avg shares: 5B. Dilutive shares: 50M (1% dilution). Stock price: $150. Basic EPS: $50B / 5B = $10.00 Diluted EPS: $50B / 5.05B = $9.90 P/E: $150 / $9.90 = 15.2 Earnings yield: 6.6% Modest 1% dilution typical of mature companies with limited employee option grants. P/E of 15 is roughly at the long-run market average — neither cheap nor expensive. Earnings yield of 6.6% compares favorably to current bond yields (4-5%).
Net income: $1B. Preferred dividends: $0. Weighted avg shares: 300M. Dilutive shares: 50M (17% dilution). Stock price: $120. Basic EPS: $1B / 300M = $3.33 Diluted EPS: $1B / 350M = $2.86 P/E (diluted): $120 / $2.86 = 42 Earnings yield: 2.4% The 17% dilution from options is substantial — common for tech companies that pay employees largely in stock. P/E of 42 reflects investor expectations of high future growth. If the company grows earnings 25% per year for several years, the current valuation can be justified; if growth slows, the P/E will likely compress.
Net income: $5B. Preferred dividends: $200M. Weighted avg shares: 1B. Dilutive shares: 10M. Stock price: $40. Earnings available to common: $5B − $200M = $4.8B Basic EPS: $4.8B / 1B = $4.80 Diluted EPS: $4.8B / 1.01B = $4.75 P/E: $40 / $4.75 = 8.4 Earnings yield: 11.9% Banks often trade at lower P/Es (8-12) than the broader market due to regulatory constraints, credit cycle risk, and book-value-driven valuation methodology. Preferred dividends subtracted from net income before EPS calculation — important for banks, utilities, and REITs with substantial preferred stock issuance.
Use this calculator when evaluating stocks, analyzing earnings reports, comparing companies on profitability metrics, or screening for value/growth characteristics. EPS is the foundation of most fundamental analysis frameworks.
For active investors, the calculator is most useful for "back of envelope" valuation when you have access to the company's underlying numbers but not the published EPS figure. Most stock screens and brokerage platforms display EPS directly, but understanding how it's constructed (and the difference between basic and diluted) helps you read the data correctly.
For long-term investors, EPS growth over multiple years is more important than the absolute EPS level in any single period. A company with $1 EPS growing 15% per year is far more valuable than one with $5 EPS that's flat. Look at "EPS growth rate" alongside the absolute number.
Pair this with the DCF calculator (the more comprehensive valuation framework that uses EPS as one input), the stock-profit calculator (for evaluating individual trades), the dividend calculator and dividend-yield calculator (for the income side of stock returns), and the CAGR calculator (for evaluating multi-year EPS growth rates).
EPS in context — what to watch for:
1. **EPS quality varies.** Some companies report adjusted/pro forma EPS that excludes items like stock-based compensation, restructuring charges, or amortization of intangibles. Compare GAAP EPS (full accounting) to adjusted EPS — large gaps may indicate aggressive accounting or one-time items.
2. **Share buybacks affect EPS without earnings growth.** A company with flat earnings that buys back 10% of its shares will see 11% EPS growth. This isn't the same as real business growth — it's financial engineering. Evaluate "EPS growth from earnings" separately from "EPS growth from buybacks."
3. **One-time items.** Tax law changes, asset sales, litigation settlements, and other one-time items can dramatically affect any single period's EPS. Look at multi-year average EPS for a cleaner profitability measure.
4. **EPS doesn't equal cash flow.** Net income includes non-cash items (depreciation, amortization, stock-based comp). Free cash flow per share is often more meaningful than EPS, especially for high-CapEx businesses.
5. **Trailing vs. Forward EPS.** Trailing EPS uses the last 12 months' actual results. Forward EPS uses analyst estimates for the next 12 months. P/E ratios using forward EPS look lower for growing companies. Use trailing P/E for "what you actually have" and forward P/E for "what analysts expect."
6. **Industry context matters.** Cyclical industries (autos, semiconductors, materials) have highly variable EPS — judging by current EPS at a cyclical peak or trough is misleading. For cyclicals, look at average EPS across a full cycle (often 5–7 years).
Discounted cash flow valuation with 5-year projections.
Calculate profit or loss from buying and selling stocks.
Calculate tax deferral and reinvestment requirements for a 1031 like-kind exchange.
Calculate tax savings using Net Unrealized Appreciation (NUA) for employer stock distributions.
Compare investing in taxable, tax-deferred, and tax-free accounts.
See how your money grows over time with compound interest and regular contributions.
Basic EPS
$1.90
Diluted EPS
$1.73
P/E Ratio
13.2
Earnings Yield
7.60%
9.1% dilution