# How to Calculate Expected EPS

Calculating EPS is simple.

Many investors like to look at different numbers and ratios when evaluating a company. There are many acronyms bandied about by so-called financial experts on television and the radio; one term often used is EPS, which stands for earnings per share. Expected EPS tells investors how much money per share outstanding a company is expected to make. It is a very simple calculation to make and only requires a little bit of digging in a company's income statement for the basic numbers.

## Step 1

Consult the latest earnings release of the company that you are putting under your magnifying glass. What you are looking for is the the total shares outstanding. This will likely be a figure in the millions and is usually found near the end of income statement. Look for "Weighted average shares of common stock outstanding, diluted," or some similar phrasing.

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## Step 2

Write down the number of diluted shares outstanding because this will be needed to make the final calculation.

## Step 3

Take the expected earnings of the company you are examining and write this figure down. You can get the expected earnings from an analyst you trust, or from the consensus of analysts, which you can find on some financial sites, such as MSN Money found at money.msn.com.

## Step 4

Divide the expected earnings of the company by the number of shares and you have the expected EPS of the company. This can be a quarterly calculation, taking the expected earnings of the quarter, or it can be for the full year, taking the estimated earnings for the full year and dividing that figure by the number of shares.

#### Tip

By itself, EPS does not mean much. But it is a great comparison figure when comparing companies in the same sector, such as LED manufacturers or chip makers.

#### Things You'll Need

• Company's income statement

• Analyst's expected earnings

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