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Explanation: Earnings Per Share (EPS) is a financial metric that represents the portion of a company’s profit allocated to each outstanding share of its common stock. It is calculated by dividing the company’s net income (after deducting preferred dividends, if any) by the total number of outstanding shares. EPS is an important indicator of a company’s profitability and is widely used by investors to assess the company’s earnings performance on a per-share basis.
EPS is commonly used to find the P/E ratio of the company which is calculated by dividing the company’s stock price with the EPS of that company. The P/E ratio helps investors assess how much they are willing to pay for each rupee of earnings generated by the company.
Example: TCS had an EPS of 115.16 rupees. This means that for each outstanding share of TCS’s common stock, the company earned a profit of 115.16 rupees during the period. EPS provides investors with valuable information about the company’s ability to generate earnings relative to the number of shares outstanding. A higher EPS is generally considered favorable, as it indicates higher profitability per share and may lead to higher stock prices. EPS is a key metric used in financial analysis, valuation, and investment decision-making.
You can view the EPS value for any company on Radar under Per Share Ratios in the Ratios section.