What is EPS (Earnings Per Share)?

Earnings Per Share (EPS) is a company's net profit divided by the number of common shares outstanding. It tells investors how much profit the company generated for each share of stock. EPS is one of the most widely used metrics for evaluating a company's profitability and comparing it against peers or its own historical performance. A higher EPS generally indicates stronger profitability relative to share count.

What is the difference between basic EPS and diluted EPS?

Basic EPS uses only the weighted average of common shares actually outstanding during the period. Diluted EPS also includes all potential shares that could be created if employees exercised stock options, convertible bonds were converted to equity, and RSUs vested. Diluted EPS is always equal to or lower than basic EPS. Most analysts prefer diluted EPS because it reflects the worst-case scenario for shareholders by accounting for all dilutive securities.

How do you calculate basic EPS and diluted EPS?

Basic EPS = (Net Income − Preferred Dividends) ÷ Weighted Average Basic Shares Outstanding. Diluted EPS = (Net Income − Preferred Dividends) ÷ (Basic Shares + All Dilutive Securities). For example: Net Income $5,000,000, no preferred dividends, 1,000,000 basic shares, 100,000 dilutive securities. Basic EPS = $5.00. Diluted EPS = $5,000,000 ÷ 1,100,000 = $4.55. Dilution impact = ($5.00 − $4.55) ÷ $5.00 = 9%.

What is a good EPS growth rate?

There is no universal answer since a good EPS growth rate depends heavily on the industry, economic cycle, and company stage. Generally, consistent EPS growth above 10% annually is considered strong for large-cap companies. Growth stocks are expected to grow EPS at 15–25% or more annually. More important than a single year's growth is consistency: a company with a 5-year EPS CAGR of 12% and positive growth in 5 of 5 years is often more valuable than one with erratic 30% then -10% swings.

How do I find fair value of a stock using EPS?

The most common EPS-based valuation method is: Fair Value = EPS × P/E Multiple. Choose a P/E multiple that reflects the company's growth prospects, quality, and risk relative to peers. Three common benchmarks: (1) Your target P/E based on growth analysis. (2) The sector average P/E for comparable companies. (3) The market average P/E — the S&P 500 long-term average is approximately 22×. If the current stock price is below your calculated fair value, the stock may be undervalued; above it, overvalued.

What effect do stock buybacks have on EPS?

Stock buybacks reduce the number of shares outstanding, which mechanically increases EPS even if net income stays flat. For example, if a company earns $10 million and has 10 million shares, EPS is $1.00. If the company buys back 1 million shares (10%), EPS rises to $10 million ÷ 9 million = $1.11, an 11% EPS increase with zero earnings growth. This is why growing EPS is not always a sign of improving business fundamentals — always check whether EPS growth is driven by actual profit growth or simply fewer shares outstanding.

Is the EPS Calculator Pro free?

Yes. The EPS Calculator Pro on StockToolHub is completely free to use with no registration, account, or subscription required. All five tabs — Basic and Diluted EPS, EPS Growth Tracker, EPS Forecast, EPS Valuation, and EPS Compare — are fully accessible immediately.

EPS Calculator Pro — Basic EPS, Diluted EPS, Growth, Forecast & Valuation

Income Statement

Net Income ($)

Total net income (common + preferred shareholders)

Preferred Dividends ($) optional

Dividends paid to preferred shareholders (subtracted first)

Weighted Avg Basic Shares

Weighted average common shares outstanding

Dilutive Securities optional

Stock Options & Warrants

Convertible Securities

RSU & Other Dilutive

Optional

Current Stock Price for P/E

Basic EPS

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Earnings per basic share outstanding

Diluted EPS

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Dilution Impact

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Earnings for Common

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Total Diluted Shares

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Total Dilutive Secs.

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Dilution per Share

P/E Ratio (Diluted)

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EPS Quality

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Basic EPS vs Diluted EPS — Dilution Breakdown

Base & Assumptions

Current / Base EPS ($)

Starting EPS — typically trailing twelve months (TTM)

Annual Net Income Growth Rate

% / yr

Expected earnings growth before share count effects

Annual Share Count Change optional

% / yr

Negative = buybacks (boosts EPS) · Positive = dilution (reduces EPS)

Forecast Horizon

years

1–10 years shown in forecast table

Current Stock Price optional

Shows implied P/E at each forecast year

Year 1 Forecast EPS

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Earnings growth adjusted for share count change

Year 3 EPS

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Year 5 EPS

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Year 10 EPS

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5-Year Total Growth

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Effective EPS CAGR

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EPS Doubling Time

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Share Count Effect

5-Year EPS Multiple

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Year-by-Year EPS Forecast

Year	Forecast EPS	YoY Growth	Cumul. Growth	Implied P/E

EPS Forecast Trajectory

Company EPS Comparison 2–5 companies

Enter Net Income and Preferred Dividends in $M, Shares in millions. EPS and P/E calculate automatically.

Company	Net Income ($M)	Pref. Divs ($M)	Shares (M)	Price ($)	EPS ($)	P/E
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Highest EPS Company

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Enter company data to start

Companies Compared

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Average EPS

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Average P/E

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EPS Spread

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EPS Comparison — Ranked Highest to Lowest

What each tab calculates

Basic & Diluted EPS

Calculates Basic EPS as (Net Income − Preferred Dividends) ÷ Basic Shares, and Diluted EPS including all dilutive securities (options, convertibles, RSUs). Shows dilution impact %, earnings available to common shareholders, diluted share count, P/E ratio if a stock price is entered, and an EPS quality rating based on dilution severity.

EPS Growth Tracker

Tracks EPS across up to 5 periods with fully editable labels (FY2020, Q3 2024, etc.). Calculates CAGR from first to last valid period, period-over-period YoY growth rates, average annual growth, best and worst periods, total EPS growth, and a consistency score. Mixed chart shows EPS trend line with growth rate bars color-coded green/red.

EPS Forecast

Projects EPS up to 10 years using base EPS, annual net income growth rate, and optional share count change. Effective EPS CAGR compounds both earnings growth and share buyback or dilution effects. Year-by-year table shows forecast EPS, YoY growth, cumulative growth, and implied P/E. Bar chart visualizes the full trajectory.

EPS Valuation

Calculates fair value by multiplying EPS against four P/E benchmarks: your target P/E, sector average, market average (S&P 500 ≈ 22×), and the stock's historical P/E. With a current price, shows upside/downside to each estimate and a valuation signal from Undervalued to Significantly Overvalued. Bar chart shows all scenarios at once.

EPS Compare

Compares EPS and P/E across up to 5 companies. Enter Net Income in $M, optional preferred dividends, shares in millions, and optional stock price — EPS and P/E auto-calculate in real time. Summary shows highest-EPS company, average EPS, average P/E, and EPS spread. Ranked bar chart updates instantly as you type.