6.1What is EPS (Earnings Per Share)?
EPS is the company’s net profit divided by its number of shares. It tells you how much profit belongs to each share.
Total profit alone doesn’t tell you what you own. EPS converts it into a per-share figure, and it is the "E" in the P/E ratio.
Four friends share a shop that earns ₹40,000 profit. Each friend’s "earning per share" is ₹10,000.
More profit per share. Growing EPS over years is a strong sign.
Little profit per share. Negative EPS means a loss.
Higher and growing EPS is better. But compare growth, not the absolute number, between companies.
- Net profit = ₹2,000 crore; shares = 100 crore (hypothetical).
- EPS = ₹2,000 cr ÷ 100 cr = ₹20.
- EPS of different companies can’t be compared directly (different share counts and prices).
- One-time gains can inflate EPS.
- Buybacks raise EPS without profit growth.
Always compare a ratio with (1) the company’s own history and (2) other companies in the same industry. A single number on its own means little.
- EPS = profit ÷ shares.
- Look for steady EPS growth.
- TTM = trailing twelve months (last 4 quarters).
Q1. Profit ₹500 cr, shares 50 cr. EPS?Show answer
₹10.
Q2. Can EPS be negative?Show answer
Yes, when the company makes a loss.
Q3. What does TTM EPS mean?Show answer
EPS over the last 4 quarters.