Earnings Per Share, EPS is one of the most useful measurement in analyzing the fundamental of a stock of a company. It basically takes what a company earned and divides it by the number of stock shares outstanding. It is always reported in the company income statement and reflected the value for either last quarter or last year of the earnings. Without any doubts, the bigger the value, the better it is for the company. The use of EPS could potentially identify a growth company as for a growth company, its EPS will increase quarter after quarter at a faster rate. Also note that if a company bought back its own share from open market and even if its earnings is able to maintain the same from quarter to quarter, its EPS will also increase from quarter to quarter.
Take an example of SIA and with reference to its 1QFY09 earnings announcement dated 28th Jul 08
profit attributable to equity holders of the company = S$358,600
as of 30th Jun 08, SIA has an outstanding share = 1,183,391,373.
EPS = S$358,600/1,183,391,373
= S$0.303 or 30.3 Scents ( as it was reported in the income statement ).
