Profitability
Earnings per share
EPS
What it is
EPS divides net income by shares outstanding. It's how much profit each share "generates" over a period.
How to read it
Absolute EPS matters less than its growth over time. A company whose EPS goes from $2 to $4 over 3 years is much more interesting than one stagnant at $5. Comparing EPS between companies makes little sense because share counts differ.
Common reference points
- Strong growth> +15% / yr
- Healthy growth+5 – 15% / yr
- Stagnant0 – 5% / yr
- Declining< 0%
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
EPS can be manipulated through buybacks (shrinking the denominator inflates the ratio without creating real value). Always check net income growth in parallel.
Other measures — Profitability
Educational content. Polaris is not a registered investment adviser and makes no recommendation.