New Delhi, March 11 -- Earnings per share (EPS) is one of the key metrics used to evaluate a company's profitability. Investors check it to assess a company's financial health and estimate potential returns over a period of time.

Earnings per share or EPS is the value of earnings per outstanding share of the total stock of a company. It shows the distribution of profit in each share of the company, giving a detailed view to a shareholder. An important metric to gauge a company's performance, a higher EPS shows increased profitability.

The formula to calculate EPS is - (net income - preferred dividends) / shares outstanding.

For example, if a company's net profit is Rs.52 lakh and Rs.2 lakh will be deducted as preferred dividends, while...