“Earnings per share” is a method of computing how much will be paid towards the investors on a per share basis. By taking the net earnings of a company and dividing it by the outstanding shares, one will have as a result the earnings per share. For example, if the net earnings sum up to $1,000, while the outstanding shares are 500 (1,000/500), will give an EPS of 2.

Having a good knowledge of the true EPS value of stocks will certainly help in gaining a better insight into the company’s financial issues.