Earnings Per Share Calculator
Earnings per share is the fundamental building block of stock valuation. It measures how much profit a company generates for each share of common stock outstanding, making it possible to compare profitability across companies of very different sizes. This calculator computes both basic EPS (using only actual shares outstanding) and diluted EPS (adding in all potentially dilutive securities such as employee stock options, warrants, and convertible instruments). Diluted EPS is the more conservative measure and is generally the figure analysts focus on because it shows what EPS would be if all claimants on equity converted their instruments. Enter net income, any preferred dividends that must be paid before common shareholders receive anything, the weighted average basic share count, and the number of dilutive shares. If you also enter the current stock price, the calculator shows the price-to-earnings ratio in both basic and diluted form, as well as the earnings yield (the inverse of P/E), which allows direct comparison to bond yields. All inputs are in dollars and share counts; EPS is expressed in dollars per share.
Formulas
Basic EPS = (net income - preferred dividends) / basic shares outstanding
Diluted EPS = (net income - preferred dividends) / (basic shares + dilutive shares)
P/E ratio (basic) = stock price / basic EPS
P/E ratio (diluted) = stock price / diluted EPS
Earnings yield = (basic EPS / stock price) × 100
If dilutive shares are zero, diluted EPS equals basic EPS (no dilution effect). If no stock price is entered (or stock price is zero), P/E ratio and earnings yield show N/A. Preferred dividends are subtracted from net income before dividing because they are paid before common shareholders participate in earnings. The weighted average share count accounts for shares issued or repurchased during the period.
How to use this calculator
- Enter net income from the company's income statement. For a public company, find this on Form 10-K (annual report) or Form 10-Q (quarterly report) filed with the SEC via EDGAR.
- Enter preferred dividends. This is the total dividend paid (or owed) to preferred shareholders during the period. Enter 0 if the company has no preferred stock.
- Enter the weighted average basic shares outstanding. This figure is disclosed on the income statement, typically labeled "weighted average common shares outstanding, basic."
- Enter dilutive shares: the additional shares that would exist if all stock options, warrants, and convertible securities were exercised or converted. This is also disclosed on the income statement or in the EPS footnotes, labeled "dilutive effect of stock options" or similar. Enter 0 if there are none.
- Optionally enter the current stock price to calculate the P/E ratio and earnings yield.
- Compare basic and diluted EPS. A large gap between the two signals significant dilution potential from employee stock options or convertible debt.
Frequently asked questions
What is earnings per share (EPS)?
EPS is the portion of a company's profit allocated to each outstanding share of common stock. It is calculated by dividing net income available to common shareholders (net income minus preferred dividends) by the weighted average number of common shares outstanding during the period. EPS is one of the most widely used metrics for evaluating a company's profitability on a per-share basis.
What is the difference between basic and diluted EPS?
Basic EPS uses only the actual shares currently outstanding. Diluted EPS assumes that all dilutive securities (stock options, warrants, convertible bonds, convertible preferred shares) are exercised and converted to common shares, increasing the share count and reducing EPS. Diluted EPS is always equal to or lower than basic EPS and is considered the more conservative measure.
What is the price-to-earnings (P/E) ratio?
The P/E ratio is the stock price divided by EPS. It represents how much investors are willing to pay for each dollar of earnings. A P/E of 20 means investors are paying $20 for every $1 of annual earnings. Higher P/E ratios imply greater growth expectations. P/E ratios vary significantly by sector, market conditions, and company stage.
What is earnings yield and how does it relate to P/E?
Earnings yield is EPS divided by stock price, expressed as a percentage. It is the inverse of the P/E ratio. A P/E of 25 corresponds to an earnings yield of 4%. Some investors compare earnings yield to bond yields to assess whether stocks are attractively priced relative to fixed income alternatives.
Where do I find the inputs for this calculator?
Net income and preferred dividends are reported on a company's income statement, filed with the SEC on Form 10-K (annual) or 10-Q (quarterly). Weighted average shares outstanding (basic and diluted) are reported on the income statement and in the earnings per share note to the financial statements. Stock prices are available from any financial data provider or the company's investor relations page.
Official sources
- SEC EDGAR: 10-K filings (annual reports containing income statements and EPS disclosures for US public companies)
- FASB: ASC 260 Earnings Per Share (the accounting standard governing EPS calculation and disclosure requirements)
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.