EPS Calculator
Calculate earnings per share the way it appears on an income statement: net income minus preferred dividends, divided by the weighted average number of common shares. Add dilutive shares for diluted EPS, or build the weighted share count from share changes during the year.
Use a minus sign for a net loss.
Each line: share count and the number of months it was outstanding (months should add up to 12).
Extra shares from options, warrants, convertibles.
After-tax interest on convertible debt or convertible preferred dividends.
How to use the EPS Calculator
- Enter net income for the period (use a minus sign for a net loss) and any preferred dividends declared.
- Enter the weighted average common shares, or switch to the helper and list each share count with the number of months it was outstanding.
- Add dilutive securities (extra shares from options, warrants or conversions) and any income add-back for diluted EPS.
- Optionally enter the share price to get the P/E ratio.
- Read basic and diluted EPS and the step-by-step calculation.
EPS formulas
Basic EPS = (net income − preferred dividends) ÷ weighted average common shares outstanding
Diluted EPS = (net income − preferred dividends + income add-backs) ÷ (weighted average shares + dilutive potential shares)
Weighted average shares = Σ (shares outstanding × months outstanding ÷ 12)
Example: net income $5,000,000, preferred dividends $500,000, 2,000,000 weighted shares and 150,000 shares from in-the-money options. Basic EPS = 4,500,000 ÷ 2,000,000 = $2.25. Diluted EPS = 4,500,000 ÷ 2,150,000 = $2.09.
Add-backs apply to convertible securities: if convertible bonds were turned into shares, the company would no longer pay their interest, so the after-tax interest is added back to earnings. For convertible preferred stock, its dividends are added back.
Weighted average shares example
| Period | Event | Shares outstanding | Months | Weighted shares |
|---|---|---|---|---|
| Jan–Mar | Start of year | 10,000,000 | 3 | 2,500,000 |
| Apr–Sep | Issued 2,000,000 shares on Apr 1 | 12,000,000 | 6 | 6,000,000 |
| Oct–Dec | Bought back 1,000,000 on Oct 1 | 11,000,000 | 3 | 2,750,000 |
| Weighted average for the year | 11,250,000 | |||
Stock splits and stock dividends are treated as if they happened at the start of the period (and restated for earlier periods), because they change the number of shares without bringing in new money. Companies report EPS on the income statement; small differences from your result usually come from rounding or day-based weighting.
Frequently asked questions
How do you calculate earnings per share?
Basic EPS = (net income − preferred dividends) ÷ weighted average common shares outstanding. A company with $5,000,000 net income, $500,000 preferred dividends and 2,000,000 weighted shares has EPS of 4,500,000 ÷ 2,000,000 = $2.25.
Why subtract preferred dividends?
EPS measures the profit available to common shareholders. Preferred shareholders are paid first, so their dividends are removed from net income before dividing by the common share count. Dividends on common shares are not subtracted.
What is the weighted average number of shares?
It is the share count adjusted for how long each block of shares was outstanding during the period. If a company had 10 million shares for the whole year and issued 2 million more halfway through, the weighted average is 10 + 2 × 6/12 = 11 million. Stock splits are applied retroactively to the whole period.
What is the difference between basic and diluted EPS?
Diluted EPS assumes that options, warrants, convertible bonds and convertible preferred shares that would lower EPS are turned into common shares. The extra shares are added to the denominator, and any interest or preferred dividends that would no longer be paid are added back to earnings. Diluted EPS is always equal to or lower than basic EPS.
What is anti-dilution?
A security is anti-dilutive if converting it would increase EPS (or reduce a loss per share). Accounting rules leave anti-dilutive securities out of diluted EPS. When a company has a net loss, potential shares are usually anti-dilutive, so diluted EPS equals basic EPS.
How is EPS used with the P/E ratio?
The P/E ratio divides the share price by EPS. With EPS of $2.25 and a share price of $45, P/E = 20. Enter the share price to see P/E and earnings yield next to EPS.