How to Calculate a Company's Weighted Average Number of Outstanding Shares

By Motley Fool Staff – Updated Apr 30, 2025 at 8:18 PM EST

Key Points

This calculation gives a more accurate picture of a company's earnings.
Weighted averages consider the duration each share count is valid to accurately reflect earnings per share.
A weighted average better represents a company's per-share earnings over time, adjusting for share count changes.
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When a company calculates its earnings over a certain period of time, it divides its profits by the number of outstanding shares. However, companies' outstanding shares can change over time as a result of newly issued shares, repurchased shares, exercised employee stock options, or several other reasons.

To most accurately reflect its earnings per share, we need to know how many shares there were during the entire period -- not just at the end. To do this, we need to calculate a weighted average of the company's outstanding shares over the time period.

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A hand truck moving a large dollar sign shape made of floating dollar bills. — Image source: Getty Images.

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Class Grade	Grade Points	Credit Hours (Weight)	Weighted Grade Points (Grade x Weight)
A	4	4	16
B	3	2	6
Totals		6 (total weight)	22
Grade points / weights			3.67

To calculate the weighted average, you need to add up the total weighted grades (16 + 6 = 22), and divide by the total weight (4 + 2 = 6). When we do this, you arrive at a GPA of 3.67, which is more than the average of an A and a B, since the A carried more weight.

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	Shares Outstanding	Portion of Year	Weighted Shares
First six months	100,000	0.5	50,000
Next six months	150,000	0.5	75,000
Weights average number of outstanding shares			125,000

With this weighted average, we can now calculate a different and more accurate EPS of $0.80 per share.

Bear in mind that this is a simplified example, and a company's number of outstanding shares can change several times during a year. However, the calculation method is the same as this chart.

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