EPS Calculator
Calculate basic earnings per share. Enter annual net income and preferred dividends in dollars and the weighted average shares outstanding — add a share price if you want the P/E ratio and earnings yield alongside.
Example: with Net income (annual, $) 2500000 · Preferred dividends ($) 100000 · Weighted average shares outstanding 1200000 · Share price (optional, $) 30 → Earnings per share (basic): $2.00.
- Earnings available to common$2,400,000
- P/E ratio at your price15.0x
- Earnings yield6.7%
Computed by the calculator below using its default values. Change any input to see your own numbers.
EPS = (net income − preferred dividends) ÷ weighted average shares outstanding. Preferred holders are paid first; EPS measures what is left for each common share.
How EPS is built
Earnings per share starts with net income, removes the dividends promised to preferred shareholders — they stand ahead of common stock — and divides what remains by the weighted average number of common shares outstanding during the period. The weighting matters: shares issued in October only count for the quarter they existed, and buybacks shrink the denominator from the repurchase date onward.
The default example: $2.5M of net income less $100K of preferred dividends leaves $2.4M for common holders; across 1.2M weighted shares, that is $2.00 per share.
Basic vs diluted, and what EPS is worth
This tool computes basic EPS. Diluted EPS also counts shares that could exist — options, warrants, convertibles — so it is equal or lower, and it is the figure analysts usually quote. On its own, a big EPS is not better than a small one: a $100 stock earning $5 and a $20 stock earning $1 are identical 20x earnings. Divide price by EPS (the P/E) or EPS by price (earnings yield) to make figures comparable across companies.
How it’s calculated
Basic EPS = (net income − preferred dividends) ÷ weighted average common shares outstanding. Earnings available to common = net income − preferred dividends. P/E = share price ÷ EPS (shown only when EPS is positive); earnings yield = EPS ÷ share price × 100. Weighted average shares = each share count × the fraction of the year it was outstanding.
Basic EPS only — dilution from options, warrants, RSUs, and convertibles is not modeled, so companies with big equity plans will show lower diluted EPS than this figure.
Worked EPS examples
| Net income | Preferred dividends | Weighted shares | Basic EPS |
|---|---|---|---|
| $1,000,000 | $0 | 1,000,000 | $1.00 |
| $2,500,000 | $100,000 | 1,200,000 | $2.00 |
| $500,000 | $50,000 | 2,000,000 | $0.23 |
| -$300,000 | $0 | 1,000,000 | -$0.30 (loss) |
Computed with EPS = (net income − preferred dividends) ÷ weighted average shares outstanding; third row rounds 0.225 to the displayed cent.
Common mistakes
- Using period-end share count instead of the weighted average — a mid-year buyback or issuance skews EPS badly.
- Forgetting preferred dividends, which overstates what common shareholders actually earned.
- Comparing your basic EPS against analyst numbers that are diluted and often adjusted for one-time items.
- Mixing periods: quarterly net income over annual average shares gives a meaningless hybrid — keep both trailing twelve months or both quarterly.
Frequently asked questions
What is the EPS formula?
EPS = (net income − preferred dividends) ÷ weighted average shares outstanding. With $2.5M income, $100K of preferred dividends, and 1.2M weighted shares: (2,500,000 − 100,000) ÷ 1,200,000 = $2.00 per share.
What is the difference between basic and diluted EPS?
Basic uses shares actually outstanding; diluted adds shares that would exist if options, warrants, and convertibles were exercised. Diluted is always equal or lower and is the more conservative figure companies must also report.
How do I compute weighted average shares?
Weight each share count by the fraction of the period it was outstanding. Start the year with 1M shares and issue 200K on July 1: 1M × 0.5 + 1.2M × 0.5 = 1.1M weighted shares.
Is a higher EPS always better?
Not by itself — EPS depends on share count, so a split halves it with nothing real changing. Compare EPS with the price (P/E), with the company's own history, and with diluted EPS to spot buyback-driven growth.
What does a negative EPS mean?
The company lost money for the period, shown as a loss per share. P/E is meaningless then (shown as n/m); analysts switch to revenue multiples or look at the path back to profitability.