A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Earnings Per Share - (EPS) ' ?
--
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. EPS is calculated as:
EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares
--
Breaking Down...
' Earnings Per Share - (EPS) ' :
--
How to Calculate 'Earnings Per Share - EPS
To calculate the EPS of a company, the balance sheet and income statement should be used to find the total number of shares outstanding, dividends on preferred stock (if any), and the net income or profit value. When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. Any stock dividends or splits that occur must be reflected in the calculation of the weighted average number of shares outstanding. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of a period.
Basic vs. Diluted EPS
The formula used in the table above calculates the basic EPS of each of these select companies. Basic EPS does not factor in the dilutive effect of additional securities. When the capital structure of a company includes stock options, warrants, restricted stock units (RSU), etc. these investments, if exercised, could increase the total number of shares outstanding in the market. To better show the effects of additional securities on per share earnings, companies also report the diluted EPS, which expands on basic EPS by including convertible securities in the outstanding shares number. The diluted EPS is the worst-case scenario for the earnings per share if certain securities were converted to common stock.
For example, the total number of NVIDIA's convertible instruments for the fiscal year ended 2016 is 108 million. If this number is added to its total shares outstanding, its diluted weighted average shares outstanding will be 541 million + 108 million = 649 million shares. The company's diluted EPS is, therefore, $1.67 billion / 649 million = $2.57.
Importance of Earnings Per Share - EPS
Earnings per share (EPS) is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings (P/E) valuation ratio, where the 'E' in P/E refers to EPS. By dividing a company's share price by its earnings per share, an investor can understand the fair market value of a stock in terms of what the market is willing to pay based on a company's current earnings.
The EPS is an important fundamental used in valuing a company because it breaks down a firm's profits on a per share basis. This is especially important as the number of shares outstanding could change, and the total earnings of a company might not be a real measure of profitability for investors. If Ford's total earnings were to increase in a subsequent year to $1.8 billion, this might seem like great news to an investor until they consider the fact that the company's total shares outstanding increased to 4.5 billion. In this case, EPS would have only gone up to $0.40.
In the Markets
Below we show you the top and bottom three companies by EPS in the S&P 500, which should give you insight into their profitability and perhaps inform decisions about which stocks to add to your Watchlist. As this list changes in real time, refer to our Markets page for updated information on the stocks you follow.
An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Buy / Trade Crypto if you do not have an account set up to do so with Canada's largest exchange: This is my personal referral link. https://www.quadrigacx.com/?ref=3f43t58ghbs1hldzi9xystdb
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Earnings Per Share - (EPS) ' ?
--
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. EPS is calculated as:
EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares
--
Breaking Down...
' Earnings Per Share - (EPS) ' :
--
How to Calculate 'Earnings Per Share - EPS
To calculate the EPS of a company, the balance sheet and income statement should be used to find the total number of shares outstanding, dividends on preferred stock (if any), and the net income or profit value. When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. Any stock dividends or splits that occur must be reflected in the calculation of the weighted average number of shares outstanding. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of a period.
Basic vs. Diluted EPS
The formula used in the table above calculates the basic EPS of each of these select companies. Basic EPS does not factor in the dilutive effect of additional securities. When the capital structure of a company includes stock options, warrants, restricted stock units (RSU), etc. these investments, if exercised, could increase the total number of shares outstanding in the market. To better show the effects of additional securities on per share earnings, companies also report the diluted EPS, which expands on basic EPS by including convertible securities in the outstanding shares number. The diluted EPS is the worst-case scenario for the earnings per share if certain securities were converted to common stock.
For example, the total number of NVIDIA's convertible instruments for the fiscal year ended 2016 is 108 million. If this number is added to its total shares outstanding, its diluted weighted average shares outstanding will be 541 million + 108 million = 649 million shares. The company's diluted EPS is, therefore, $1.67 billion / 649 million = $2.57.
Importance of Earnings Per Share - EPS
Earnings per share (EPS) is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings (P/E) valuation ratio, where the 'E' in P/E refers to EPS. By dividing a company's share price by its earnings per share, an investor can understand the fair market value of a stock in terms of what the market is willing to pay based on a company's current earnings.
The EPS is an important fundamental used in valuing a company because it breaks down a firm's profits on a per share basis. This is especially important as the number of shares outstanding could change, and the total earnings of a company might not be a real measure of profitability for investors. If Ford's total earnings were to increase in a subsequent year to $1.8 billion, this might seem like great news to an investor until they consider the fact that the company's total shares outstanding increased to 4.5 billion. In this case, EPS would have only gone up to $0.40.
In the Markets
Below we show you the top and bottom three companies by EPS in the S&P 500, which should give you insight into their profitability and perhaps inform decisions about which stocks to add to your Watchlist. As this list changes in real time, refer to our Markets page for updated information on the stocks you follow.
An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Buy / Trade Crypto if you do not have an account set up to do so with Canada's largest exchange: This is my personal referral link. https://www.quadrigacx.com/?ref=3f43t58ghbs1hldzi9xystdb
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
--
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Buy / Trade Crypto if you do not have an account set up to do so with Canada's largest exchange: This is my personal referral link. https://www.quadrigacx.com/?ref=3f43t58ghbs1hldzi9xystdb
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
Thanks for sharing this never really understood Earnings Per Share until now
Good post
Interesting
Another important fact related to EPS is that since it not only measures Earnings, but shares outstanding; companies tend to manipulate it buy having large share buybacks that reduce the amount of shares outstanding which inflate the EPS. For example, if a company has $10 per share on 100 shares outstanding and decide to buy back 50 shares (exaggerating for ease of calculation); the new EPS would be $20 per share. So, despite them having the same earnings on a dollar basis, they demonstrate a 100% percent increase buy reduce the shares outstanding by buying them back. This has been a trend for years in Wall Street so be aware!
This post is a good segway into PE ratios, or Price of a share divided by its EPS. A high PE ratio means you are paying a higher amount for every profitable dollar earned by that company.