# How to calculate earnings per share in 2 minutes

Investment Basics, Stocks Part 3

#### What is a earnings per share?

#### Welcome to Professor Savings. We teach finance basics.

#### Hi I’m your host today Rayfil Wong.

#### Ttoday we are going to talk about earnings per share.

#### As an investor, earnings per share research can possibly help you compare two distinct companies.

#### let’s roll

#### Earnings per share (EPS) is the monetary value of earnings per each outstanding share of a company’s common stock.

#### But lets dive into an example.

#### EPS is calculation.

#### A companies’s profit subtracted by company dividends divided by number of share outstanding.

#### Naomi has money to invest and is deciding to invest comparing two companies.

#### Jen.com sells auto online has $1,000,000 profit minus $100,000 100,000 outstanding shares

#### $10,000,000 minus $100,000 divide by 100,000= $9 Earnings per share

#### Fredpetfood.com has $3,000,000 profit paid $300,000 dividends and has 200,000 outstanding shares

#### Let’s do the math

#### $3,000,000 minus 300,000 divide by 200,000 equals 13.5 eps

#### Let’s do some comparing.

#### Fred has a higher EPS $13.5 compared to Jen’s auto of $9.

#### This at least helps you compare two companies in different sector compare ratios.

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