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How to Calculate Growth on Common Stock Earnings Per Share

Original post by Mark Kennan of Demand Media

Higher earnings make for happier investors.

Earnings per share (EPS) is a company's total income divided by the number of outstanding shares of common stock. It's one of the major financial statistics investors and analysts look at when evaluating a company as a potential investment. Knowing how the company's earnings per share changes from year to you informs the decisions you make about whether to buy, sell or hold a stock.

Contents

Step 1

Subtract the prior year's earnings per share from the current year's earnings per share to find the growth. For example, if the company had $3.33 in earnings per share last year and $3.65 in earnings per share this year, the company's earnings per share growth equals 32 cents.

Step 2

Divide the company's growth in earnings per share by the prior year's earnings per share. In this example, divide 32 cents by $3.33 to get 0.096.

Step 3

Divide the result by 0.01 to find the growth in earnings per share represented as a percentage. In this example, divide 0.096 by 0.01 to find the company's earnings per share grew by 9.6 percent.


                   

About the Author

Mark Kennan is a freelance writer specializing in finance-related articles. He has worked as a sports editor for "Ring-Tum Phi" and published articles on a number of online outlets. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.

Photo Credits

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