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Earnings Per Share Calculator

Work out basic and diluted earnings per share, plus the price to earnings ratio at any share price.

Inputs
EPS resultCalculated
Basic EPS2.67 per share

Formula

EPS = (net income - preferred dividends) / weighted average shares

Diluted EPS uses the share count after options and convertibles

Inputs
  Net income                4,200,000.00
  Preferred dividends       200,000.00
  Weighted average shares   1,500,000
  Diluted shares            1,650,000
  Share price               42.00
Working
Earnings for common shareholders4,200,000.00 - 200,000.00 = 4,000,000.00
Basic EPS4,000,000.00 / 1,500,000 = 2.67
Diluted EPS4,000,000.00 / 1,650,000 = 2.42
Results
  Earnings available to common shares   4,000,000.00
  Basic earnings per share              2.67
  Diluted earnings per share            2.42
  Dilution effect                       9.09%
  Price to earnings ratio               15.75
  Earnings yield                        6.35%
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About the Earnings Per Share Calculator

Earnings per share takes profit belonging to ordinary shareholders and spreads it across the shares they hold. Preferred dividends come out first because that money is promised elsewhere, so 4,200,000 of net income less 200,000 of preferred dividends leaves 4,000,000, and across 1,500,000 weighted average shares that is 2.67 per share.

The share count is a weighted average rather than a year end snapshot, because a company issuing stock in November should not have those shares counted as though they existed in January. Diluted EPS repeats the calculation with the share count that would exist if options, warrants and convertibles were all exercised. Moving from 1,500,000 to 1,650,000 shares cuts EPS to 2.42, a dilution effect of 9.09 percent, and that percentage is usually the more revealing figure for a company that pays staff in equity.

Adding a share price turns the result into a price to earnings ratio and its inverse, the earnings yield, which is easier to compare against a bond yield. Remember that EPS is an accounting figure, sensitive to write downs, one off gains and buybacks that shrink the denominator without improving the business. Cross check it against cash based measures such as the EBITDA Calculator, and against the payout in the Dividend Calculator.

How to use

  1. Enter net income for the period, after tax.
  2. Enter preferred dividends if the company has preferred shares, otherwise leave it at zero.
  3. Enter the weighted average ordinary shares outstanding.
  4. Optionally add diluted shares and a share price to get diluted EPS and the P/E ratio.

Common questions

What is the EPS formula?
EPS = (net income - preferred dividends) divided by the weighted average number of ordinary shares outstanding during the period.
Why use a weighted average share count?
Shares issued or bought back partway through the year should only count for the part of the year they existed, otherwise EPS would jump for accounting reasons alone.
What is diluted EPS?
The same earnings divided by the share count that would exist if all options, warrants and convertible securities were converted into ordinary shares.
Can EPS be negative?
Yes. A loss making period produces a negative figure, and the tool reports it. The P/E ratio is left out in that case because it has no meaning.