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Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company during a defined period of time. It is a key measure of corporate profitability, focusing on the interests of the company's owners (shareholders), [1] and is commonly used to price stocks.
Earnings per share (EPS) measures the amount of total profit earned per outstanding share of common stock in a specific period, usually either a quarter or a year.
This formula often gives the same answer as market price / earnings per share , (if new capital has been issued it gives the wrong answer), as market capitalization = (market price) × (current number of shares), whereas earnings per share = net income / average number of shares .
The accounting equation plays a significant role as the foundation of the double-entry bookkeeping system. The primary aim of the double-entry system is to keep track of debits and credits and ensure that the sum of these always matches up to the company assets, a calculation carried out by the accounting equation.
Earnings per share is net income divided by the total number of shares outstanding. Plainly put, it's the amount of money an investor earns for each share.
The Benjamin Graham formula is a formula for the valuation of growth stocks. ... = the company’s last 12-month earnings per share = P/E base for a ...
The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth ...
The part of earnings not paid to investors is left for investment to provide for future earnings growth. Investors seeking high current income and limited capital growth prefer companies with a high dividend payout ratio. However, investors seeking capital growth may prefer a lower payout ratio because capital gains are taxed at a lower rate.