How to Calculate Growth on Common Stock Earnings Per Share

by Mark Kennan

Earnings per share (EPS) is a company's total income divided by the number of outstanding shares of common stock. It's one of the major financial statistics investors and analysts look at when evaluating a company as a potential investment. Knowing how the company's earnings per share changes from year to you informs the decisions you make about whether to buy, sell or hold a stock.

1. Subtract the prior year's earnings per share from the current year's earnings per share to find the growth. For example, if the company had \$3.33 in earnings per share last year and \$3.65 in earnings per share this year, the company's earnings per share growth equals 32 cents.

2. Divide the company's growth in earnings per share by the prior year's earnings per share. In this example, divide 32 cents by \$3.33 to get 0.096.

3. Divide the result by 0.01 to find the growth in earnings per share represented as a percentage. In this example, divide 0.096 by 0.01 to find the company's earnings per share grew by 9.6 percent.

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