EPS

DEFINITION

Earnings Per Share comes in two flavors. Basic EPS = net income / weighted-average basic shares outstanding. Diluted EPS = net income / weighted-average diluted shares, which includes the dilutive effect of options, RSUs, warrants, and convertible securities. Both are reported on the income statement and are GAAP-required disclosures. Companies often also report 'adjusted EPS' — a non-GAAP version with selected items excluded.

WHY IT MATTERS FOR RETAIL INVESTORS

EPS dominates quarterly earnings coverage but is easy to manipulate via buybacks (reduces denominator) and accounting choices (changes numerator). For growth companies, focus on adjusted-EPS only if the adjustments are reasonable; for value companies, focus on GAAP diluted EPS. Always cross-check against net income — if EPS grows faster than net income, buybacks (not operations) are doing the work.

RELATED TERMS

• Earnings Release
• Non-GAAP Measures
• 10-Q