# EPS (Earnings Per Share) Growth Calculation

## The growth percentage in EPS over two comparable periods of time.

EPS (Earnings per Share) is a fundamental measure of how profitable a company may be, it is the portion of a company’s profit that may be assigned to each outstanding share. The EPS growth figure is the percentage change of the EPS over two comparable periods. It can be applied to both historic and forecast data. An alternative name given to the EPS growth is Earnings Growth.

For context the formula used to calculate the EPS is seen as:

**(Net Income minus Preferred Dividends) divided by Average Number of Shares**

The calculation for the EPS growth is derived as:

**((EPS(Period 2) minus EPS (Period 1)) divided by EPS (Period 1)) multiplied by 100**

Supposing a company had an EPS value of 34.5 for the year just completed and 32.8 for the year prior, the calculation for the EPS Growth would be the following:

**(34.5 minus 32.8) divided by 32.8) multiplied by 100**

Giving us an EPS Growth value of 5.2

Companies with a positive EPS are generally more highly valued and a consistent track record of positive EPS growth is a good sign. Being said the EPS growth on its own can be unreliable and so one could take this a step further and compare a company’s EPS growth with others within the same industry or sector.

The EPS Growth acts as an excellent complimentary tool that should certainly be used with other metrics when evaluating a company.