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How much profit belongs to one share?

Earnings Per Share (EPS)

Lesson 3 of 11 · Profit

EPS is the company's net profit divided equally among all its shares.

In everyday life

Ten friends own a food truck equally. It makes ₹1,000 profit this month, so each friend's share of the profit is ₹100. That ₹100 is the EPS.

How it's worked out

Example: Sunrise Tea, a made-up company that sells packaged tea across India.

Net profit
what the company keeps after paying every cost, interest and tax
₹150 Cr
Number of shares
how many equal pieces the company is split into
10 Cr shares
EPS
₹15

In words: Each share earned ₹15 this year.

Try it yourself

Move the sliders and watch the answer, the picture and the verdict change together.

₹ Cr
₹0 Cr₹500 Cr
Cr
1 Cr shares50 Cr shares
EPS
₹15

Each share earned ₹15 this year.

What's a good number?

EPS on its own isn't good or bad: a company with more shares has a smaller EPS. What matters is whether it grows year after year.

How to read it

Good signs

  • EPS grows steadily for 5 years or more.
  • EPS grows faster than sales (the company is getting more efficient).

Watch out for

  • If a company issues many new shares, EPS can fall even when profit rises. That's called dilution.
  • A company buying back its own shares raises EPS without earning more.
All lessons

For learning only. Example companies are made up, and the rough guides are rules of thumb, not targets. Nothing here is advice to buy or sell any stock.