Earnings Per Share (EPS) is one of the most fundamental financial metrics in equity analysis, representing the portion of a company's net profit attributable to each outstanding equity share. It is calculated as: EPS = (Net Profit – Preference Dividends) ÷ Weighted Average Shares Outstanding. Basic EPS uses the actual shares outstanding, while Diluted EPS accounts for the potential dilution from stock options, convertible instruments, and warrants — representing a more conservative picture of per-share earnings. EPS growth over time is the primary driver of long-term stock price appreciation — as a company grows its earnings per share consistently, its intrinsic value increases proportionally. In India, SEBI mandates that all listed companies disclose both basic and diluted EPS in their quarterly and annual financial results. EPS is the denominator in the widely used P/E ratio, making it central to equity valuation. Investors track EPS growth CAGR over three to five years as a key indicator of a company's ability to compound shareholder wealth consistently.
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