Earning per share (EPS) growth rate is a financial metric that tells an investor how have the earning per share been performing over the last year compared to the years before. EPS growth rate reveals whether a company is becoming more profitable over time.
EPS growth rate is one of the best financial metrics to determine if a company is a wonderful business.
But before we can go into EPS growth rate, we need to have a basic understanding of EPS.
What is Earning per Share (EPS)?
Earning per share (EPS) is a financial metric investors used to measure how much the company is making per share of common stock outstanding, after taking into consideration of the dividend paid during the year.
EPS is sometimes known as the bottom line, the final statement which states how much a share of the company is worth.
Numbers to be considered in EPS are:
- Net income
- Preferred dividends
- Weighted common shares