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More glossary terms
- JOLTS (job openings and labor turnover survey)
- Earnings per share (EPS)
- Nasdaq composite
- Unit
- Value investing
Earnings per share (EPS) definition
Tells you how much profit a company makes for every share you own
What is EPS?
Earnings per share (EPS) tells you how much profit a company makes for every share you own. It’s a handy way to compare profitability across companies, no matter their size.
How to calculate EPS
EPS = (net profit – preferred dividends) ÷ average number of shares outstanding
For example, if a company makes £5 million in net profit, pays £500 000 in preferred dividends, and has 2 million shares outstanding, its EPS is:
(£5,000,000 – £500,000) ÷ 2 000 000 = £2.25 per share
A higher EPS generally means a company is more profitable on a per-share basis. But it’s best used alongside other metrics—like revenue growth, cash flow, and the P/E ratio—to get the full picture.
Investing glossary
It's important you know
Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.