Earnings per share (EPS)

What earnings per share means, basic versus diluted EPS, GAAP versus adjusted EPS, and how EPS connects profit to the share price.

What it is

Earnings per share is a company's net income divided by its number of shares. If a company earns $1 billion and has 500 million shares, EPS is $2.00. It is the slice of yearly profit that belongs to each share.

EPS is the "E" in the P/E ratio (price-to-earnings), and its growth over time is the main driver of long-term share prices. See EPS growth (TTM and forward).

Basic versus diluted

  • Basic EPS divides by the shares that exist today.
  • Diluted EPS also counts shares that could be created from stock options, restricted stock and convertible bonds.

Diluted EPS is the more conservative and usually the better number. Companies that pay staff heavily in stock show a noticeable gap between the two.

GAAP versus adjusted

  • GAAP EPS follows official accounting rules and appears in the audited filings.
  • Adjusted (non-GAAP) EPS is the company's own measure. It usually excludes stock-based compensation, restructuring, amortization of acquired assets and one-off items.

Analyst estimates are usually on an adjusted basis. Adjusted EPS can be useful, but the exclusions are chosen by management. When the gap between GAAP and adjusted is large and persistent, ask why. Stock-based compensation, in particular, is a real cost to shareholders because it dilutes them.

Where to find it

EPS is at the bottom of the The income statement in every 10-Q and 10-K, in both basic and diluted form.

See also

  • EPS growth (TTM and forward) How to read earnings per share growth, why it can outpace revenue through operating leverage, and how buybacks can flatter it.
  • P/E ratio (price-to-earnings) What the P/E ratio means, trailing versus forward P/E, what counts as high or low, and why P/E alone can mislead without growth.
  • The income statement How to read an income statement line by line, from revenue to earnings per share, and which lines matter most for investors.
  • Net margin Net profit margin shows how much of each sales dollar a company keeps after every cost. What counts as strong, and how to read its trend.

Pages that link here: How to read financial statements, The cash flow statement

Last updated September 30, 2026. Education only, not investment advice.