Earnings per Share (EPS)
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Earnings per share is a company’s net profit attributable to shareholders divided by the weighted average number of outstanding shares. It expresses how much profit the company generated for each share during a period. EPS is the denominator of the P/E ratio and a core input in equity valuation.
Example
A company earning 900 million EGP with 300 million shares outstanding reports earnings per share of 3 EGP. If it issues 100 million new shares and profit is unchanged, EPS falls to 2.25 EGP.
Why it matters
EPS puts profit on a per-share basis, which is the only form in which it is comparable to a share price. It is the denominator of the P/E ratio and the figure most commonly quoted when results are announced.
A common mistake
Assuming rising EPS means a growing business. EPS can rise because profit grew, or because the share count shrank through a buyback, or because of a one-off gain — the three have very different implications.