Earnings Per Share (EPS)
How earnings per share (EPS) is calculated using weighted average shares, with a Company A example in RM and the pitfalls to avoid.
What is Earnings Per Share (EPS)?
Earnings per share (EPS) is net profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue. It shows the profit earned for each share, in ringgit and sen. EPS is also the base for the P/E ratio, so share count changes matter.
How it is calculated
Take net profit attributable to ordinary shareholders (after tax, minority interests and preference dividends). Divide by the weighted average share count, which counts mid-year issues only for the months outstanding.
EPS = (Net profit attributable to ordinary shareholders) ÷ Weighted average number of ordinary shares
How Malaysian investors use it
Bursa quarterly reports show EPS in the income statement, usually as basic and diluted figures. Check restated figures after bonus or rights issues.
Worked example: Company A
Hypothetical Company A had 380 million shares at the start of the year, issued 40 million halfway through, and ended with 420 million. Net profit was RM60 million.
| Item | Figure |
|---|---|
| Weighted average shares | 400 million |
| Net profit | RM60 million |
| EPS | RM0.15 |
Year-end shares would give RM0.14 instead.
Common mistakes
- Using year-end shares instead of the weighted average after a share issue.
- Comparing raw EPS across companies, where share counts and prices differ. Use the P/E ratio instead.
- Forgetting that a one-off gain can lift EPS for a single year.
Related terms
- P/E ratio: the share price divided by EPS.
- Income statement: where net profit and EPS are reported.
- TTM (trailing twelve months): how quarterly EPS is combined over a year.
Where Finworld shows it
Finworld Software shows EPS within the income statement of each company’s financial statements, on annual, quarterly and trailing 12-month views.
Frequently asked questions
Is a higher EPS always better?
Not on its own. Buybacks or one-off gains can lift it, so check the profit behind it over several periods.
What is the difference between basic and diluted EPS?
Basic EPS uses shares in issue. Diluted EPS also counts convertible instruments and share options, which can lower the figure.
Why does past EPS change after a bonus issue?
A bonus issue adds shares without new money, so earlier EPS figures are restated downwards for comparability.
See how this fits into Finworld Software, or book a demo.
Finworld provides market education and research tools only. This is not investment advice. Market data is end-of-day.
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