Earnings per Share
Earnings per share , or EPS, is the amount of money the company actually earns for each share of stock that is outstanding. It is calculated, in percentage terms, as follows:
EPS = Net Profit*100/(#Of Common Shares Outstanding)
EPS should increase each year. As discussed earlier, companies report their earnings for each quarter-in other words, every three months. Just before companies announce their earnings to the world, investment analysts make predictions about the amount of money these companies will make for each share of stock outstanding for the current quarter and for the year (or years) to come. This information can give you a good idea what the best minds on Wall Street think about certain companies.
Wall Street analysts publish their best EPS estimates for big, publicly traded companies. When these companies finally report their earnings, most investors usually compare the Wall Street analysts' projections with the companies' actual earnings per share for the quarter. If the actual EPS is less than the Wall Street analysts' projections, the stock price of the company usually goes down. The opposite can also happen.
We recommend that Teenvestors ignore analysts' earnings projections for the current quarter and focus on long-term projections and the reasons why those projections were made. What should matter to you is what the analysts feel the stock will do in the next year or two. See if their logic makes sense to you; invest for the future, not the present.
Earnings per share , or EPS, is the amount of money the company actually earns for each share of stock that is outstanding. It is calculated, in percentage terms, as follows:
EPS = Net Profit*100/(#Of Common Shares Outstanding)
EPS should increase each year. As discussed earlier, companies report their earnings for each quarter-in other words, every three months. Just before companies announce their earnings to the world, investment analysts make predictions about the amount of money these companies will make for each share of stock outstanding for the current quarter and for the year (or years) to come. This information can give you a good idea what the best minds on Wall Street think about certain companies.
Wall Street analysts publish their best EPS estimates for big, publicly traded companies. When these companies finally report their earnings, most investors usually compare the Wall Street analysts' projections with the companies' actual earnings per share for the quarter. If the actual EPS is less than the Wall Street analysts' projections, the stock price of the company usually goes down. The opposite can also happen.
We recommend that Teenvestors ignore analysts' earnings projections for the current quarter and focus on long-term projections and the reasons why those projections were made. What should matter to you is what the analysts feel the stock will do in the next year or two. See if their logic makes sense to you; invest for the future, not the present.
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