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Investment term of the day: earnings per share (EPS)

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Calculating the earnings per share (EPS) gives a measurement of the amount of a company’s profit that can be allocated to one share of its stock.

The result can serve as an indicator to a company’s profitability. The EPS is calculated by subtracting dividends on preferred stock from the net income and dividing this by the average outstanding shares.

Investopedia definition

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