Earnings Per Share (EPS) Calculator
Calculate earnings per share from net income, preferred dividends, and weighted average shares outstanding.
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Result
Earnings Per Share
$2.40
Earnings Available to Common Shareholders
$4,800,000.00
How to Use the Earnings Per Share (EPS) Calculator
Enter a company's net income, any preferred dividends paid out, and the weighted average number of common shares outstanding during the period. Preferred dividends are subtracted first because that income belongs to preferred shareholders, not common shareholders — what's left is divided across the weighted average share count to get earnings per common share.
Example
A company reports $5,000,000 in net income and paid $200,000 in preferred dividends, with a weighted average of 2,000,000 common shares outstanding during the year. Earnings available to common shareholders is $4,800,000, giving an EPS of $4,800,000 / 2,000,000 = $2.40 per share.
Common Use Cases
- Comparing a company's profitability per share across different reporting periods.
- Feeding EPS into other valuation metrics like the P/E ratio.
- Evaluating how new share issuance or a buyback would dilute or boost per-share earnings.
FAQs
- Why subtract preferred dividends? Preferred shareholders have a priority claim on dividends before common shareholders. EPS specifically measures earnings attributable to common stock, so preferred dividends are removed from net income first.
- What is "weighted average shares outstanding"? It's the average number of shares outstanding over the reporting period, weighted by how long each share count was in effect — this accounts for shares issued or repurchased partway through the period rather than just using the ending share count.
- What is the difference between basic and diluted EPS? Basic EPS uses actual shares outstanding, as calculated here. Diluted EPS also factors in potential shares from options, warrants, and convertible securities, which typically makes diluted EPS slightly lower than basic EPS.