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Earnings per share (EPS)

One of the most important figures for a shareholder in financial statements is Earnings Per Share (EPS). Earnings per share is arrived at by dividing total profits (earnings) earned during a fiscal with the total number of equity shares outstanding.

Earnings per share is a measure of the profitability of a company. It is a measure that an investor looks at before investing.

If a company is posting continuous EPS growth year after year, it could be a sign that the company can sustain profits over time.

However, the high EPS of stock alone does not make a stock good for investing, and one of the world's richest men agrees with this.

What shall be more interesting for investors is a combination of high EPS and low price-to-earnings ratio (PE ratio).


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