Earnings per share & Dividend per share SIMPLIFIED
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One of the most popular metrics to look at while analysing a company is it Earnings per share (EPS). The higher the EPS, the better the company’s position.
But don’t confuse a company’s earnings per share with your earnings from that stock.
While EPS is the net earnings of the company for every outstanding share, it doesn’t mean that the company gives all of it to its shareholders.
A part of the EPS that the shareholders get is known as the dividend. And dividend per share, is the dividend distributed to the retail investors for every share they hold which can be considered as your earnings for every stock you hold.
So next time you are looking at a company’s profitability ratios, consider EPS of the company & DPS of the shareholders.
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