What is EPS — earnings per share?
EPS stands for earnings per share. It is the company's profit after tax divided by the number of shares. If a company earns 2 billion and has 100 million shares, EPS is 20. Each share has "earned" 20 that year. EPS is the figure that, together with the share price, gives the P/E ratio: price 300 divided by EPS 20 is a P/E of 15.
Why EPS and not just the profit
The profit is a figure for the whole company. You do not own the whole company — you own some shares. EPS tells you how much of the profit belongs to your share. That makes it possible to compare with the price: paying 300 for a share that earns 20 a year means paying 15 years of profit. A company can increase its profit by 10% and still have falling EPS if it has issued 15% more shares (share issue). That is why shareholders look at EPS.
Growth in EPS is what matters
One year's EPS says what the company earned. The development over five years says where it is heading:
- EPS 10 → 12 → 14 → 17 → 20: the company is growing about 19% a year. That justifies a high P/E.
- EPS 20 → 19 → 21 → 18 → 20: the company is standing still. Then the P/E should be low.
The relationship between EPS growth and P/E is what the PEG ratio tries to capture.
What to watch out for
- One-offs: If the company sold a factory last year, EPS is artificially high. Look for "adjusted EPS" or read what the profit consisted of.
- Negative EPS: The company is losing money. P/E cannot be calculated — and a low price is not necessarily cheap.
- Buybacks: If the company buys its own shares, the count falls and EPS rises — without the profit rising. That is not cheating, but it is not growth in the business either.
- Currency: EPS is stated in the company's reporting currency. A US company's EPS is in dollars.
The typical beginner's mistake
Comparing EPS across companies — "A has EPS 50, B has EPS 5, so A is better". EPS depends on how many pieces the cake is cut into. Compare P/E or EPS growth instead. EPS alone is only useful for the same company over time.
How you see it in Kiggo
Kiggo shows EPS among the key figures on every stock alongside P/E, and explains in words whether the company makes money and whether earnings are growing. Kiggo compares only with companies in the same industry — a shipping company's EPS swings are normal, a utility's are not.
Related terms
Frequently asked questions
What is a good EPS?
There is no such number. EPS depends on the number of shares. What is good is an EPS that grows year after year, and a price that has not run too far ahead of it — that is, a reasonable P/E.
What is the difference between EPS and dividend per share?
EPS is what the share earned. Dividend is the part the company chose to pay out. If a share earns 20 and pays 8, 12 is kept in the company to grow with. The ratio — 40% here — is called the payout ratio.
What is diluted EPS?
EPS calculated as if all stock options and convertible loans had become shares. It is slightly lower than basic EPS and is the most cautious figure. It is usually the one used in P/E.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-23.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
