Earnings Per Share (EPS) Calculator
Calculate basic and diluted Earnings Per Share (EPS) using net income, preferred dividends, and weighted average shares outstanding.
How to use this tool
- Enter net income, preferred dividends, weighted avg. shares outstanding and diluted shares outstanding (optional) in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your basic eps and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Basic EPS: EPS = (Net Income − Preferred Dividends) / Weighted Avg. Shares
Diluted EPS: EPSdiluted = (Net Income − Preferred Dividends) / Diluted Shares
How it works
Basic EPS measures the profit allocated to each common share by dividing earnings available to common shareholders (net income minus preferred dividends) by the weighted average common shares outstanding during the period. Diluted EPS uses fully diluted share count including convertible securities, options, and warrants, giving a more conservative measure of per-share earnings.
Worked example
EPS for a company with $5M net income
- Net income = $5,000,000; Preferred dividends = $200,000
- Earnings available to common = $5,000,000 − $200,000 = $4,800,000
- Basic EPS = $4,800,000 ÷ 1,000,000 shares = $4.80
- Diluted EPS = $4,800,000 ÷ 1,050,000 diluted shares = $4.57
Basic EPS = $4.80; Diluted EPS = $4.57
Common mistakes to avoid
- Forgetting to subtract preferred dividends from net income before dividing by shares — preferred shareholders have a senior claim, so their dividends reduce earnings available to common shareholders.
- Using ending shares outstanding rather than the weighted average — shares issued or repurchased mid-year must be time-weighted to reflect how long they were outstanding during the period.
- Confusing basic EPS with diluted EPS: diluted EPS includes the potential shares from stock options, convertible bonds, and warrants, which always produces an equal or lower number than basic EPS.
Key terms
- What is EPS?
- Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding common share, used as a key indicator of profitability.
- Why subtract preferred dividends?
- Preferred dividends are paid before common shareholders receive any earnings, so they must be subtracted to determine the earnings available to common stockholders.
- What is diluted EPS?
- Diluted EPS accounts for all potential shares that could be created from convertible securities, stock options, and warrants, providing a worst-case per-share earnings figure.
- What is a good EPS?
- There is no universal benchmark — EPS should be evaluated relative to the company's historical trend, peers in the same industry, and analyst expectations.
Frequently asked questions
- What is the difference between basic and diluted EPS?
- Basic EPS uses actual shares outstanding. Diluted EPS includes all potentially dilutive securities (options, warrants, convertible debt), showing the worst-case earnings per share if all were exercised.
- Why do analysts focus on EPS?
- EPS translates total earnings into a per-share figure that can be compared across time and used in valuation multiples like P/E. It is also a key driver of dividend capacity per share.
- Can EPS be negative?
- Yes, when a company reports a net loss. Negative EPS (a loss per share) makes P/E ratios meaningless and is a key signal to evaluate the company's path to profitability.