Earnings Per Share Calculator: How Profitable Is It?

Is a $2.00 EPS good or bad?

On the defaults — $120,000 of net income, $12,000 of preferred dividends and 54,000 shares — the earnings per share is $2.00. The earnings per share is the profit each share earned — net income minus preferred dividends, divided by the shares outstanding. As a rough yardstick, a $2.00 EPS at a $20 share price is a different story from $2.00 at a $200 share price — the first is a P/E of ten, the second a P/E of one hundred — so compare EPS within one industry, not across them. A $2.00 EPS is neither good nor bad on its own: it is the profit per share, and the share price decides what you pay for it.

Three things about the model are worth stating plainly.

First, the earnings per share is ($120,000 − $12,000) ÷ 54,000 = $2.00. Second, the net income needed for a 2.50 EPS is 2.50 × 54,000 + $12,000 = $147,000. And third, the shares needed for a 2.50 EPS is ($120,000 − $12,000) ÷ 2.50 = 43,200; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $120,000 net income, $12,000 preferred dividends, 54,000 shares, target EPS 2.50.

Line 1 — the EPS. The earnings per share is ($120,000 − $12,000) ÷ 54,000 = $2.00.

Line 2 — the net income needed. The net income needed for a 2.50 EPS is 2.50 × 54,000 + $12,000 = $147,000.

Line 3 — the shares needed. The shares needed for a 2.50 EPS is ($120,000 − $12,000) ÷ 2.50 = 43,200.

Line 4 — the check. $2.00 of profit × 54,000 shares + $12,000 of preferred dividends = $120,000, the net income; and each share earned $2.00 of profit.

Every branch, checked

Net income $150,000: Net income $150,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.56; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 55,200 — With net income of $150,000 the EPS rises to $2.56 — two dollars and fifty-six cents of profit per share.

Shares 60,000: Net income $120,000.00; preferred dividends $12,000.00; shares 60,000; Earnings per share $1.80; net income needed for the 2.50 target $162,000.00; shares needed for the 2.50 target 43,200 — With 60,000 shares the EPS falls to $1.80 — the same profit split over more shares.

Net income $180,000: Net income $180,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $3.11; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 67,200 — With net income of $180,000 the EPS rises to $3.11 — three dollars and eleven cents of profit per share.

Shares 43,200: Net income $120,000.00; preferred dividends $12,000.00; shares 43,200; Earnings per share $2.50; net income needed for the 2.50 target $120,000.00; shares needed for the 2.50 target 43,200 — With 43,200 shares the EPS rises to $2.50 — the same profit split over fewer shares.

Net income $12,000: Net income $12,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $0.00; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 0 — With net income equal to the preferred dividends the EPS is $0.00 — nothing left for the common shares.

Preferred dividends $0: Net income $120,000.00; preferred dividends $0.00; shares 54,000; Earnings per share $2.22; net income needed for the 2.50 target $135,000.00; shares needed for the 2.50 target 48,000 — With no preferred dividends the EPS rises to $2.22 — all of the profit belongs to the common shares.

What-if bars — Net income halved, shares doubled, net income doubled: net income halved to $60,000: EPS $0.89; shares doubled to 108,000: EPS $1.00; net income doubled to $240,000: EPS $4.22 — Halving the net income drops the EPS to $0.89; doubling the shares drops it to $1.00; doubling the net income lifts it to $4.22.

The reverses, worked backwards

Smallest whole-dollar net income for the EPS to reach 2.00: At the displayed $120,000 the figures are Net income $120,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.00; net income needed for the 2.00 target $120,000.00; shares needed for the 2.00 target 54,000. At the displayed $120,000 the EPS is $2.00 (exactly 2.00). At $119,999 the net income is $1 short of the $120,000 needed — and the unrounded EPS is 1.999981, which displays as 2.00 after rounding, so $120,000 is the smallest whole-dollar net income for the EPS to reach 2.00.

Smallest whole-dollar net income for the EPS to reach 2.50: At the displayed $147,000 the figures are Net income $147,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.50; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 54,000. At the displayed $147,000 the EPS is $2.50 (exactly 2.50). At $146,999 the net income is $1 short of the $147,000 needed — and the unrounded EPS is 2.499981, which displays as 2.50 after rounding, so $147,000 is the smallest whole-dollar net income for the EPS to reach 2.50.

Largest whole-share count for the EPS to STAY at or above 2.00: At the displayed 54,000 the figures are Net income $120,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.00; net income needed for the 2.00 target $120,000.00; shares needed for the 2.00 target 54,000. At the displayed 54,000 the EPS is $2.00 (exactly 2.00). At 54,001 shares the count is 1 share over the 54,000 needed — and the unrounded EPS is 1.999963, which displays as 2.00 after rounding, so 54,000 is the largest whole-share count for the EPS to stay at or above 2.00.

Smallest whole-dollar net income for the EPS to reach 1.50: At the displayed $93,000 the figures are Net income $93,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $1.50; net income needed for the 1.50 target $93,000.00; shares needed for the 1.50 target 54,000. At the displayed $93,000 the EPS is $1.50 (exactly 1.50). At $92,999 the net income is $1 short of the $93,000 needed — and the unrounded EPS is 1.499981, which displays as 1.50 after rounding, so $93,000 is the smallest whole-dollar net income for the EPS to reach 1.50.

Largest whole-share count for the EPS to STAY at or above 2.50: At the displayed 43,200 the figures are Net income $120,000.00; preferred dividends $12,000.00; shares 43,200; Earnings per share $2.50; net income needed for the 2.50 target $120,000.00; shares needed for the 2.50 target 43,200. At the displayed 43,200 the EPS is $2.50 (exactly 2.50). At 43,201 shares the count is 1 share over the 43,200 needed — and the unrounded EPS is 2.499942, which displays as 2.50 after rounding, so 43,200 is the largest whole-share count for the EPS to stay at or above 2.50.

Smallest whole-dollar net income for the EPS to reach 3.00: At the displayed $174,000 the figures are Net income $174,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $3.00; net income needed for the 3.00 target $174,000.00; shares needed for the 3.00 target 54,000. At the displayed $174,000 the EPS is $3.00 (exactly 3.00). At $173,999 the net income is $1 short of the $174,000 needed — and the unrounded EPS is 2.999981, which displays as 3.00 after rounding, so $174,000 is the smallest whole-dollar net income for the EPS to reach 3.00.

A warning about the neighbours: every neighbour above shows as the target when rounded to two decimals, but its unrounded EPS is a hair below the target. An investor underwriting on the unrounded EPS would still say no where the unrounded figure misses the line. The page prints the unrounded neighbour value in full so the rounding does not mislead you: 1.999981, 2.499981, 1.999963, 1.499981, 2.499942 and 2.999981.

What the defaults assume

The defaults are $120,000 of net income, $12,000 of preferred dividends, 54,000 shares and a target EPS of 2.50 — Net income $120,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.00; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 43,200. With Net income $150,000, Net income $150,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $2.56; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 55,200. With Shares 60,000, Net income $120,000.00; preferred dividends $12,000.00; shares 60,000; Earnings per share $1.80; net income needed for the 2.50 target $162,000.00; shares needed for the 2.50 target 43,200. With Net income $180,000, Net income $180,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $3.11; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 67,200. With Shares 43,200, Net income $120,000.00; preferred dividends $12,000.00; shares 43,200; Earnings per share $2.50; net income needed for the 2.50 target $120,000.00; shares needed for the 2.50 target 43,200. With Net income $12,000, Net income $12,000.00; preferred dividends $12,000.00; shares 54,000; Earnings per share $0.00; net income needed for the 2.50 target $147,000.00; shares needed for the 2.50 target 0. With Preferred dividends $0, Net income $120,000.00; preferred dividends $0.00; shares 54,000; Earnings per share $2.22; net income needed for the 2.50 target $135,000.00; shares needed for the 2.50 target 48,000. With What-if bars — Net income halved, shares doubled, net income doubled, net income halved to $60,000: EPS $0.89; shares doubled to 108,000: EPS $1.00; net income doubled to $240,000: EPS $4.22. With Net income $0, preferred dividends $0, Earnings per share $0.00. With Shares 0, Earnings per share — (undefined: no shares to divide by). With Net income $119,999, Earnings per share $2.00. With Shares 54,001, Earnings per share $2.00. With Net income $120,000, Earnings per share $2.00. With Shares 43,201, Earnings per share $2.50. With Net income $0, preferred dividends $12,000, Earnings per share −$0.22. With EPS bars, net income $60,000: EPS $0.89; net income $240,000: EPS $4.22; shares 108,000: EPS $1.00; shares 27,000: EPS $4.00. With net income of $0 and preferred dividends of $12,000, the EPS is −$0.22 — a negative EPS means the company lost money after paying preferred shareholders — a loss per share, not a bargain.

A note on the rounding: with net income of $119,999 the unrounded EPS is 1.999981, which rounds half-up to 2.00 — but it is still below the 2.00 line. With 54,001 shares the unrounded EPS is 1.999963, which rounds to 2.00. With 43,201 shares the unrounded EPS is 2.499942, which rounds half-up to 2.50 — but it is just below the 2.50 line. The page prints the unrounded values so the rounding does not mislead you.

Output · formula · meaning

Who uses this

• The investor checking a stock before buying: they learn $120,000 of net income less $12,000 of preferred dividends over 54,000 shares is a $2.00 EPS — and they check the $147,000 reverse to see the net income a 2.50 EPS needs.
• The shareholder watching a loss-making company: they learn a negative EPS means the company lost money — a loss per share, not a bargain — and they check the 43,200 reverse to see the shares a 2.50 EPS needs.
• The value hunter comparing two stocks: they learn a $2.00 EPS at a $20 share price is a different story from $2.00 at a $200 share price — and they check the $93,000 reverse to see the net income a 1.50 EPS needs.
• The student learning valuation ratios: they learn the EPS is the “E” in the price-to-earnings ratio — P/E is the share price divided by EPS — and they check the $174,000 reverse to see the net income a 3.00 EPS needs.

Accuracy & limitations

The math is first-principles: the earnings per share is (net income − preferred dividends) ÷ shares outstanding; the net income needed at the target is the target EPS times shares outstanding plus preferred dividends; the shares needed at the target is (net income − preferred dividends) divided by the target EPS — all rounded to two decimals half-up. The reverses are judged on the UNROUNDED EPS: a neighbour one dollar or one share short shows as the target when rounded to two decimals, but its unrounded EPS is below the target, so it does not meet the bar — the page prints the unrounded neighbour value in full. A negative EPS means the company lost money after paying preferred shareholders: at $0 of net income with $12,000 of preferred dividends the EPS is −$0.22 (unrounded −0.222222) — a negative EPS is a loss per share, not a bargain — so the EPS is negative and the calculator shows the negative figure with a note, never hides it and never shows “—” for it. Zero shares is undefined: with no shares there is nothing to divide by, so the earnings per share cannot be computed — the calculator shows “—” with a note, never Infinity or NaN. What the model cannot do is judge the stock: basic EPS uses the shares actually outstanding, while diluted EPS also counts options, warrants and convertible securities and is usually lower — always say which one you mean; growing EPS means growing profit per share, but share buybacks raise EPS without raising profit at all, because the same profit is split over fewer shares, so check whether the profit grew or the share count shrank; EPS can be shaped by one-off gains, asset sales and buybacks, so look at several years and cross-check with cash flow; trailing EPS uses the last twelve months of profit, while forward EPS uses forecast profit and is usually higher, because profit is expected to grow. Use it to see the profit each share earned — then read the rest of the accounts.

Frequently asked questions