Earnings Per Share (EPS): What It Means, How to Calculate, Limitations

What Is Earnings Per Share (EPS)?

By Scott Levine – Updated Sep 14, 2025 at 3:16 PM

Key Points

EPS reveals a company's profit per share, calculated by net income minus preferred dividends divided by shares.
Companies can manipulate EPS through share count changes, affecting investment evaluations.
Investors use EPS alongside other metrics like P/E ratio and ROE to assess stock value.

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Infographic defining and showing the formula for earnings per share (EPS) — Image source: The Motley Fool

A company reports its EPS in consolidated statements of operations (income statements) in both annual (10-K) and quarterly (10-Q) SEC filings. Considering a company's earnings as its profit, the company can either distribute that money to shareholders or reinvest it in the company.

It's useful to know how to calculate EPS yourself for a few different reasons.

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Net Income

Revenue minus all expenses.

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Dividends Per Share

The dividends a company pays out per share and a commonly used per-share metric.

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About the Author

Scott Levine is a contributing Motley Fool stock market analyst covering energy, industrials, technology, and materials. He is also a high school English teacher and a small business owner. He holds a bachelor’s degree in English and creative writing from Binghamton University, a master’s degree in secondary education from Adelphi University, and an advanced certificate in school building leadership from CUNY Queens College. A crossword puzzle enthusiast, he has solved more than 3,100 New York Times puzzles with a 97% solve rate.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.