Deep Dive: What Is Earnings Per Share (EPS) — The Single Number That Drives Stock Prices
Of all the metrics Wall Street obsesses over, none moves stock prices quite like earnings per share. When Apple reported $2.84 diluted EPS for its fiscal Q1 2026 — beating analyst estimates — the stock rallied. When a company misses its EPS target by even a penny, shares can plunge in after-hours trading. EPS is the single number that distills a company's entire profitability story into a figure every investor can compare. Earnings per share measures how much profit a company generates for each outstanding share of its common stock. It is the foundation of the price-to-earnings (P/E) ratio, the most widely used valuation metric in equity analysis. Understanding EPS — how it is calculated, what affects it, and where it can mislead — is essential for anyone evaluating stocks. Whether you are screening companies, reading an earnings report, or trying to understand why a stock just dropped 8% after hours, EPS is almost always at the center of the story. This guide breaks down the EPS formula, explains the critical difference between basic and diluted EPS, walks through real examples from Apple, Microsoft, and NVIDIA, and shows how investors use EPS alongside other metrics to make informed decisions.