We often come across the term EPS(Earnings per share) in the
television channels when the companies report their quarterly/annual
reports. Lets see whats exactly is EPS
Earnings per share = (Net Income - Dividend paid) / Outstanding shares
Where Outstanding shares = Total number of shares held by the
investors. This is referred to as Capital stock in the company balance
sheet.
EPS can be used as a comparison tool for evaluating companies. However
we should compare EPS of companies in the same domain and not across
various sectors.The decision to buy a company's share should not be
totally dependent on one technical parameter. It should be based on
collection of all technical parameters.
Instead of comparison of two companies by comparing their net income ,
comparing their EPS would give a more better comparison in terms of
efficiency of the company to generate profit for each share that the
investor holds.Two companies may have same net income,but one might
have a higher EPS, because it has used less number of shares to
generate that income.Given that net profit of two companies are same,
the one with a higher EPS is better for investment.
There are three types of EPS reported.
Trailing EPS = Net profit for the last financial year/outstanding
shares.
Current EPS = Estimated profit for the current financial year/
outstanding shares.
Future EPS = Estimated profit for the upcoming financial year/
outstanding shares.
When the company splits the stock bases, say from a face value of Rs
10 to face value to Rs 1,the EPS of the company would also get
adjusted.
EPS is used in measuring PE ratio,which is again much discussed
technical parameter.We shall see this in detail in the next blog
entry.
Subbu.
http://investorskool.blogpsot.com/
Posted by Lawyerkill on August 30, 2008, 8:59 am
> We often come across the term EPS(Earnings per share) in the
> television channels when the companies report their quarterly/annual
> reports. Lets see whats exactly is EPS
Now me, I have cable, I come across hot nude women.
Posted by Lawyerkill on August 30, 2008, 9:00 am
> We often come across the term EPS(Earnings per share) in the
> television channels when the companies report their quarterly/annual
> reports. Lets see whats exactly is EPS
>
Not me. I have cable. I come across hot nude women.
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