In financial terms, what does EPS stand for?

EPS stands for Earnings Per Share, which is a critical measure used to assess a company's profitability on a per-share basis. This metric is calculated by taking the net earnings of a company and dividing it by the total number of outstanding shares. It is an important indicator as it allows investors to compare the profitability of companies on a similar scale, making it easier to evaluate performance relative to peers in the same industry or market. A higher EPS indicates greater profitability, which generally attracts investors, as it signifies that the company is financially healthy and effective in generating profit from its equity base.

Understanding EPS is essential for financial analysis, as it forms the basis for several other financial ratios and metrics, such as the price-to-earnings (P/E) ratio, which investors use to assess whether a stock is overvalued or undervalued relative to its earnings.