Earnings Per Share-what is it and why its important
Investing is one of the most important ways to grow your money. It makes your money work for you and is one of the best ways to grow your wealth. Investing can be one of the most complicated things to learn. There are seemingly an endless number of ways to try to measure a stock, you have different analysts and news/online personalities all telling you different things, and books offering a wide variety of advice. Whether you are looking to refresh on the basics or learn it for the first time. Its always helpful to have ways to make some of the difficult and hard to understand topics tied to allusions or simplified.
However there are some basics that generally all investors look at. We will look at some of them. I want to focus mainly on Earnings Per Share or EPS. To find a company’s EPS you would divide the Net Profit by the number of Outstanding Shares. The net profit is the amount that leftover after you subtract all costs and expenses from the total profits. Shares Outstanding are the number of shares that are owned by all of its shareholders, excluding all shares that are owned by the company. The number of Shares Outstanding can change overtime as more shares are issued or shares are bought back.
So why does this matter, if the share price is high it has to be good right? Why does it matter how much money is made per share?
