Earnings per share (EPS)
Learn what earnings per share (EPS) means, how to calculate it and how to read it for SGX-listed companies.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Earnings per share (EPS) shows how much profit a company makes for each ordinary share
- You calculate EPS by subtracting preference dividends from net profit, then dividing by the weighted average number of ordinary shares
- Companies listed on the Singapore Exchange (SGX) must report both basic and diluted EPS under Singapore's financial reporting standards
- EPS is most useful when you compare it with similar companies and track it alongside other profitability ratios
What is earnings per share?
Earnings per share (EPS) is a company's profit divided by its ordinary shares. It tells you how much profit each share has earned over a period, usually a year or a quarter.
SGX-listed companies report EPS in their financial statements. They follow Singapore Financial Reporting Standards (International), or SFRS(I), which are identical to International Financial Reporting Standards (IFRS) for annual periods beginning on or after 1 January 2018.
Think of EPS as slicing a cake. If the business is the cake and each share is a slice, EPS tells you how much profit sits on your slice. A rising EPS usually means the company is becoming more profitable for each shareholder.
Investors use EPS to compare companies in the same industry. If you're a small business owner reviewing a listed investment or your own company's reports, it gives you a quick snapshot of profit per share.
How to calculate earnings per share
You can work out EPS with one formula and four steps. All the figures you need are in a company's income statement and share records.
EPS formula
The formula is: EPS = (net profit – preference dividends) ÷ weighted average number of ordinary shares. Follow these steps to apply it:
- Find the net profit attributable to ordinary shareholders for the period
- Subtract any preference dividends, since that profit belongs to preference shareholders
- Work out the weighted average number of ordinary shares, adjusting for shares issued or bought back during the period
- Divide the adjusted profit by the weighted average number of shares
Example EPS calculation
Say a company makes a net profit of S$2,000,000 and pays S$200,000 in preference dividends. That leaves S$1,800,000 for ordinary shareholders.
The company starts the year with 400,000 ordinary shares and issues 200,000 more on 1 July. The new shares exist for half the year, so they count as 100,000 shares, giving a weighted average of 500,000.
EPS is S$1,800,000 ÷ 500,000 = S$3.60. Each ordinary share earned S$3.60 of profit that year.
Basic EPS vs diluted EPS
Basic EPS uses the ordinary shares actually on issue. Diluted EPS also counts shares that could be created from convertible instruments, options and warrants.
Under International Accounting Standard 33 (IAS 33), adopted in Singapore as SFRS(I) 1-33, companies with publicly traded ordinary shares must show both figures with equal prominence in the statement of comprehensive income. Diluted EPS is always equal to or lower than basic EPS, so it gives you the more cautious view.
A few adjustments shape the diluted figure:
- Interest saved on convertible bonds is added back to earnings, because that interest wouldn't be paid once the bonds convert
- Shares from converting those instruments are added to the share count
- Shares that options and warrants could create are added too
- Antidilutive instruments, which would raise EPS if converted, are left out
Types of EPS
Beyond basic and diluted, you'll see EPS adjusted or split in different ways. Each version answers a slightly different question about profit.
Adjusted EPS
Adjusted EPS strips out one-off items such as restructuring costs or a gain from selling a business unit. It shows what the company earns from its regular operations, though companies choose which items to remove.
Trailing EPS vs forward EPS
Trailing EPS uses actual profit from the past 12 months. Forward EPS uses estimates for the next 12 months, so it's useful for planning but can change as conditions shift.
EPS from continuing operations
When a company closes or sells part of its business, it reports those results separately. IAS 33 then requires basic and diluted EPS for continuing operations too, so you can see profit from the parts of the business that will carry on.
How EPS is used
EPS is most useful when you compare it. Investors look at it across similar companies and across time to judge profit performance.
It's also the base of the price-to-earnings (P/E) ratio, which divides share price by EPS. The P/E ratio shows how much investors pay for each dollar of profit, a common way to value a company.
Tracking EPS growth over several years reveals whether profit per share is rising steadily. A falling EPS is a prompt to dig into costs and sales, and it fits into a wider approach to measuring profitability.
EPS and dividends
EPS is profit per share, while a dividend is the cash the board chooses to pay out per share. Companies pay dividends from their earnings, and the payout ratio links the two.
The payout ratio is annual dividend per share ÷ EPS. A company with EPS of S$4.00 that pays a S$1.00 dividend has a payout ratio of 25%.
A low payout ratio means the company keeps more profit as retained earnings to fund growth. A high ratio rewards shareholders now but leaves less to reinvest.
What is a good EPS?
A good EPS depends on the company's industry and stage of growth. The figure makes sense only when you compare it with the right benchmark.
An EPS of S$2.00 might be strong in one industry and average in another. A steadily rising EPS often says more than a high one-year figure, and a young company may post low EPS while it invests in growth.
For a fuller picture, pair EPS with revenue growth and profit margins.
Limitations of EPS
EPS is quick to read, but it leaves some things out. Keep these gaps in mind when you use it:
- It doesn't show how much debt a company uses to generate profit
- It doesn't show how well a company uses its capital, which is why investors also check return on equity against shareholders' equity
- Share buybacks can lift EPS without any rise in profit
- Different accounting policies can make EPS hard to compare between companies
- It says nothing about whether the share price is good value
Understand your profit per share with Xero
EPS starts with a clear, accurate profit figure. Xero gives you real-time visibility of revenue and expenses, with customisable financial reports and dashboards.
You'll see how your business is performing and share the numbers with your accountant or investors. Try Xero today and get one month free.
FAQs on earnings per share
Here are answers to common questions about EPS that go beyond the basics.
Is EPS the same as a dividend?
No. EPS is an accounting figure that involves no cash leaving the business, so a company can report high EPS and still pay no dividend at all.
Do private small businesses in Singapore need to report EPS?
No. The EPS standard applies to companies whose ordinary shares are publicly traded, so unlisted companies aren't required to present it, though you can still calculate it for your own shareholders.
Why does EPS change from quarter to quarter?
Quarterly EPS moves with seasonal swings in sales and with changes in the share count. Comparing a quarter with the same quarter last year gives you a fairer view.
How does EPS affect share price?
Share prices tend to react to EPS compared with what analysts expected. A result above forecasts often lifts the price, while a miss can push it down even if EPS grew.
Can EPS be negative?
Yes. Negative EPS means the company made a net loss, which is common for early-stage companies investing heavily, and it makes the P/E ratio meaningless for that period.
How do share buybacks affect EPS?
Buybacks reduce the number of shares, so EPS rises even if profit stays flat. Because EPS uses a weighted average, the full effect shows up over the year after the buyback.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.