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Eps Ttm

Earnings Per Share (EPS) Explained

Overview

Earnings per share (EPS) is a financial metric that measures a company's profitability on a per-share basis. It is calculated by dividing the net income by the number of outstanding common shares.

Types of EPS

  • Trailing EPS: Represents earnings generated over a prior period, typically a fiscal year.
  • Trailing PE: A valuation multiple based on the last 12 months of actual earnings.
  • TTM EPS: The most commonly used version, calculated by adding up earnings per share for the past four quarters.

Importance

EPS is a key indicator of a company's financial performance and is widely used by investors and analysts to:

  • Compare the profitability of different companies in the same industry.
  • Assess a company's ability to generate earnings.
  • Make informed investment decisions.

Limitations

EPS should be used with caution as it does not take into account factors such as:

  • Non-recurring expenses or income.
  • Changes in accounting methods.
  • The impact of stock splits or buybacks.


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