What Is EPS and How Is It Calculated?

Fundai Education Team · October 3, 2026 · 7 min read

Learn the earnings per share formula and the difference between basic, diluted and TTM EPS, and learn how to review it alongside cash dividends.

To understand what earnings per share is and what exactly the concept means in the capital market, we need to rely on its accounting definition: net profit attributable to ordinary shareholders divided by the weighted average number of shares in the period. This figure is accounting profit per share, and it differs from the cash deposited into a shareholder's account, because a cash payment is made only once the general assembly approves it.

What Is Earnings Per Share and What Does It Mean on the Stock Exchange?

What does EPS mean on the stock exchange? This term is short for Earnings Per Share and refers to the accounting profit of each share, calculated at the end of financial periods. On its own, this variable does not determine the company's cash position or the total return on an investment.

The concept of earnings per share should not be confused with cash yield or cash flow, because profit is derived on an accrual accounting basis. The income statement shows the performance of that same period, and the allocation or payment of profit to shareholders' accounts depends on the decision of the general assembly.

In the income statement on the Codal system, basic earnings per share is reported alongside the items of the period's performance. To understand how the income statement relates to the other statements, read the article Reading Financial Statements in Fundamental Analysis: A Step-by-Step Guide to the Income Statement, Balance Sheet and Cash Flow. When comparing figures, also keep the reporting period and the type of financial statement consistent.

To check the earnings per share figure in official reports, read the explanatory notes on capital and the number of shares alongside the net profit figure, so that the calculation basis for each period is clear.

How is earnings per share calculated?

In answering the question of how earnings per share is calculated, note that the numerator is net profit attributable to ordinary shareholders and the denominator is the weighted average number of ordinary shares during the period; therefore, changes in capital during the period are reflected in the denominator. This is the same definition that Iranian Accounting Standard No. 30, Earnings per Share gives for basic earnings per share.

In the GHMINU income statement report, we at Fundai arrange the financial statement items based on Codal data so that you can directly review the net profit row and the basic earnings per share row. The number of shares arising from nominal capital should not replace the weighted average number of shares.

Changes in capital during the period affect the denominator of basic EPS, but what is the concept of diluted earnings per share? This ratio is calculated by adjusting the profit attributable to ordinary shareholders and the weighted average number of shares for the effects of potentially dilutive ordinary shares. According to the accounting standard, only effects that reduce earnings per share are included in this calculation, and the anti-dilutive effect is set aside.

What is the difference between basic EPS, diluted EPS and EPS TTM?

In financial statements, basic earnings per share shows the period's realized performance based on the shares outstanding. By contrast, what is TTM EPS? This ratio is obtained by dividing the net profit of the most recent twelve months by the company's current number of shares, and it smooths out seasonal fluctuations.

To assess the effect of dilution, investors should read the earnings per share note in the financial statements to determine whether the company has potential ordinary shares with a dilutive effect.

In Codal data, the net profit of the past four quarters, comprising summer 1404 (127.6 billion tomans), autumn 1404 (131.0 billion tomans), winter 1404 (222.7 billion tomans) and spring 1405 (380.2 billion tomans), totals 861.5 billion tomans. Dividing this figure by the company's 7 billion shares, according to market data dated 08/07/1405, gives a TTM EPS of 1,231 rials. The closing price on 08/07/1405 is 9,360 rials, and the TTM P/E recorded in the Fundai ratios section as of 09/07/1405 is 7.60, which is consistent with this same division.

At Fundai, we calculate each quarter's net profit separately so that changes in quarterly performance are transparent. The chart below shows the quarterly earnings per share of Minoo Sharq Food Industries Company in consecutive periods.

Each quarter's figure in this chart is the earnings per share the company reported using the share count of that same period. GHMINO's capital rose from 585 to 700 billion tomans in 1404; for this reason, the sum of the four quarters in the chart does not equal the TTM EPS above, which is calculated on the current number of shares.

How does earnings per share differ from cash dividend per share?

Basic earnings per share is the accounting figure for the period; cash dividend per share (DPS) is the amount the general meeting approves for distribution per share. Approval of DPS does not mean that EPS and the cash amount distributed are equal.

The annual ordinary general meeting decides on the amount of cash dividend to be distributed, and the approved figure may differ from the period's earnings per share. The approved cash dividend is the portion of distributable profit that receives authorization for cash distribution, and undistributed profit remains in the company.

1. View the income statement Go to the Ghominu page and review the annual net profit and basic earnings per share rows.

2. Check the approved cash dividend In the profit margin and cash dividend section, view the cash dividend approved by the meeting (DPS) and the dividend payout ratio.

3. Screen with filters In the filters section, select financial ratios and apply the condition "P/E TTM less than 10" so that comparable companies can be compared.

What Does a Negative EPS Mean?

Negative basic EPS is recorded when net profit attributable to ordinary shareholders for the period is negative. This result cannot be reached simply by comparing operating revenue with cost of goods sold; all items that affect net profit for the same period also matter.

When net profit attributable to ordinary shareholders for the period is negative, the numerator becomes negative, and the result is a negative basic EPS on the stock exchange. This figure represents the accounting loss attributable to ordinary shareholders in the period concerned.

In financial statement analysis, understanding what negative EPS means on the stock exchange is very important. When trailing twelve-month profit turns negative, the price-to-earnings (P/E) ratio becomes negative; since a negative ratio does not provide a meaningful basis for comparing analytical valuations, analytical platforms usually leave it blank.

#EPS #Iran Stock Market #Fundamental Analysis #Earnings Per Share