The first part of the statement is generally true: Earnings Per Share (EPS) is indeed a metric used to measure a company's profitability on a per-share basis. A higher EPS can indicate stronger profitability, which may be viewed positively by investors because it suggests that the company is generating more earnings for each share of its stock. However, the second part of the statement is not entirely accurate. The number of shares outstanding does not directly impact EPS in the way suggested. EPS is calculated by dividing a company's net income by its total number of outstanding shares. Therefore, the number of shares outstanding does not inherently lower EPS. If a company issues more shares (increasing the number of shares outstanding), it dilutes the ownership interest of existing shareholders. However, this doesn't necessarily mean that EPS will decrease. It depends on whether the newly issued shares contribute positively or negatively to the company's earnings. If the company uses the proceeds from issuing new shares to generate additional income, it may not necessarily reduce EPS. In summary, while a higher EPS can be viewed favorably by investors, the impact of changes in the number of shares outstanding on EPS is more nuanced and depends on various factors, including the reason for the change in shares outstanding and its impact on the company's overall profitability.
Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.
@@user-zw7cd7pe4u Very true, If you're looking for help building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.
@@MaryPatricia-wr3wj How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.
@@user-zw7cd7pe4u renowned for her proficiency and expertise in the financial market, *KRISTIN GAIL CUNNINGHAM* my financial advisor, holds a broad understanding of portfolio diversification and is recognized as an authority in this domain.
But even though the EPS for Bill's shop is higher, Cameron's carpet offers also Dividends for the investors. Would still Bill's shop a better "options"?
dividends is like a payment the company makes to the people who buy the shares as like a thank you was holding on the shares. It also says that the company is in a good financial position, and if the company gives a dividend people like buying those stocks more which can also increase the stocks price, and the companies value. I think thats it but don't quote me on it
Rynance, in your example you say that $1,000 invested in Bill’s gives you “rights to more profits” than Cameron’s, because Bill’s EPS is higher. Is this correct? Surely it depends on the price you paid for the shares. It’s “earnings per share” not “earnings per dollar invested”. So if $1,000 buys me 10 shares of Bill’s but 100 shares of Cameron’s then the former investment gives me rights to only $133.30 of profit but the latter gives me rights to $800.00 of profit - clearly better. Correct?
3:39 wait. But what if BIKE share costs 1kusd which means I get 13,3usd for 1kusd invested, vs and if CARPET share cost 100usd which for 1kusd investment gives me 10shares and each gives 8usd eps? Then CARPET investment is better because 10x8=80 vs 1x13,3=13,3. How then eps let’s easy to compare two different companies? I don’t get it.
I returned back and back to your videos when I am not sure about some stock valuations :) You are doing a great job, keep on doing. Btw EPS is one of the most important metrics I pay attention to when buying/selling a stock. Thanks !
what is the share price of bills bike shop vs camerons carpet ? with 1000 dollars how many shares you can buy? if Bills bike shop's share price is 1000 dollars you can only buy one share, and if cameron's carpet share price is 1 dollar you can buy 1000 shares, so EPS is not enough to see how much you can get for your money
Thank you for the video but i am confused why dividends are subtracted from net income. Is it because the dividends are paid out for preferred stock and not common stock?
Dividends are subtracted from net income because it is basically an expense the corporation pays from itself, out to the shareholders. Dividends take away from the company's total earnings because when dividends are paid to investors, it is money that is withdrawn from the company and does not count towards their net earnings. Side note, in most cases (but not all), dividends are paid to both common and preferred stock
@@Rynance then it’s not going to be apple to apple if one company pay more dividends?? People would prefer stocks that return the dividend and has a higher EPS… Also, since it’s “per share”, even it has higher EPS, if the per share price is high, is it preferable to have lower share price but higher EPS?
@Rynance Is Bill's bike shop still good investment? Because in the example no dividend payout is shown. Whereas the carpet business does pay a dividend. Isn't that where the real advantage is?
Amazing video! Quick question, when you say "outstanding shares", what do you mean? If a company "gives out" 100 shares to the stock market and 50 of those shares are bought, would the outstanding shares be 100 or 50?
A company's outstanding shares are the total number of shares issued and actively held by stockholders-both individual investors and corporate insiders.
You can find shares outstanding on Yahoo Finance usually. If not there, you will be able to find the number of shares outstanding on the balance sheet in their most recent quarterly report. For profit, no, it is not market cap. Profit can be found in the income statement in their quarterly reports as well, typically referred to as 'net income'.
@@chrisfr3sh that will be a little more difficult to find. To find the total paid in preferred dividends, you’ll have to go to the company’s website, go to investor relations, and find their most recent annual or quarterly report. In there, find the ‘statement of cash flows’ and there you can find the total paid in preferred dividends. I hope that makes sense!
What if Bill's Bike Shop is valued at $20 per share, and Cameron's is valued at $0.10 / share ? 1 share bills = 200 shares Cameron. That makes it seems like Cameron's business is 200x more effective at producing profit. Or to Bill's 13.33 profit, cameron's capital produced $1600 profit. Not sure that I get it. ;p. And if I do get it, then it is nearly a useless metric. Ah yep, suspicion confirmed. EPS is only meaningful in P/E calculation. Thanks for the vids, they are good. :)
If the share price is lower than explained in the video then the eps will also be lower leaving those 200 stock you get for Cameron less valuable profit wise then bills
I learned and understand more from this video than the last 4-5 videos I watched combined. Thank you!
same!
looks simple but hard to understand detail... @!!!!!!!!
we think that these whiteboard animations are super cool and keep the audience attached
Great! Thanks for stopping by!
The first part of the statement is generally true: Earnings Per Share (EPS) is indeed a metric used to measure a company's profitability on a per-share basis. A higher EPS can indicate stronger profitability, which may be viewed positively by investors because it suggests that the company is generating more earnings for each share of its stock.
However, the second part of the statement is not entirely accurate. The number of shares outstanding does not directly impact EPS in the way suggested. EPS is calculated by dividing a company's net income by its total number of outstanding shares. Therefore, the number of shares outstanding does not inherently lower EPS.
If a company issues more shares (increasing the number of shares outstanding), it dilutes the ownership interest of existing shareholders. However, this doesn't necessarily mean that EPS will decrease. It depends on whether the newly issued shares contribute positively or negatively to the company's earnings. If the company uses the proceeds from issuing new shares to generate additional income, it may not necessarily reduce EPS.
In summary, while a higher EPS can be viewed favorably by investors, the impact of changes in the number of shares outstanding on EPS is more nuanced and depends on various factors, including the reason for the change in shares outstanding and its impact on the company's overall profitability.
You are such a great teacher Ryan. You have explained everything in such a playful and easy manner that very few people can. Thanks man!
Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.
As you plan your retirement, be sure to
talk with a financial advisor who can help you make the most of your retirement investing scheme.
@@user-zw7cd7pe4u Very true, If you're looking for help
building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.
@@MaryPatricia-wr3wj How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.
@@user-zw7cd7pe4u renowned for her proficiency and expertise in the financial market, *KRISTIN GAIL CUNNINGHAM* my financial advisor, holds a broad understanding of portfolio diversification and is recognized as an authority in this domain.
@@MaryPatricia-wr3wj Thank you, I just checked her out and I have sent her an email. I hope she gets back to me soon.
But even though the EPS for Bill's shop is higher, Cameron's carpet offers also Dividends for the investors. Would still Bill's shop a better "options"?
GameStop has an EPS of 598.64 😩 and the company has $1 billion cash on hand 😩😩
hi sorry for the dumb question, why would a company pays dividends if it affects their EPS?.. What does dividends do?..
dividends is like a payment the company makes to the people who buy the shares as like a thank you was holding on the shares. It also says that the company is in a good financial position, and if the company gives a dividend people like buying those stocks more which can also increase the stocks price, and the companies value. I think thats it but don't quote me on it
What does he mean by outstanding ?
Thanks for watching! Have any questions? Drop a comment and I'll get back to you ASAP!
Easy to understand. Thank you!
Rynance, in your example you say that $1,000 invested in Bill’s gives you “rights to more profits” than Cameron’s, because Bill’s EPS is higher. Is this correct? Surely it depends on the price you paid for the shares. It’s “earnings per share” not “earnings per dollar invested”. So if $1,000 buys me 10 shares of Bill’s but 100 shares of Cameron’s then the former investment gives me rights to only $133.30 of profit but the latter gives me rights to $800.00 of profit - clearly better. Correct?
I was also thinking this, but I don't know anything about the market so can someone comfirm?
This video is true only if stocks of both companies has same price
My good sir, thank you so ver ver much. I was so bloody confused with what the exact importance of EPS was, and this really helped. Thanks my guy!
3:39 wait. But what if BIKE share costs 1kusd which means I get 13,3usd for 1kusd invested, vs and if CARPET share cost 100usd which for 1kusd investment gives me 10shares and each gives 8usd eps? Then CARPET investment is better because 10x8=80 vs 1x13,3=13,3. How then eps let’s easy to compare two different companies? I don’t get it.
I returned back and back to your videos when I am not sure about some stock valuations :) You are doing a great job, keep on doing. Btw EPS is one of the most important metrics I pay attention to when buying/selling a stock.
Thanks !
Pls explain all matrices..one should consider before buying a share
How do fundamentals play a role in the p/s? What about the current market which seems to be unfavorable for stocks? What about speculation?
I understand it now thanks for explaining it thoroughly.
I watched a hundred video and still did not understand. This video was so understandable and so simple.❤❤❤❤❤ thank you
Does esp - mean the company is loseing money
what is the share price of bills bike shop vs camerons carpet ? with 1000 dollars how many shares you can buy? if Bills bike shop's share price is 1000 dollars you can only buy one share, and if cameron's carpet share price is 1 dollar you can buy 1000 shares, so EPS is not enough to see how much you can get for your money
Thank you for the video but i am confused why dividends are subtracted from net income. Is it because the dividends are paid out for preferred stock and not common stock?
Dividends are subtracted from net income because it is basically an expense the corporation pays from itself, out to the shareholders. Dividends take away from the company's total earnings because when dividends are paid to investors, it is money that is withdrawn from the company and does not count towards their net earnings.
Side note, in most cases (but not all), dividends are paid to both common and preferred stock
@@Rynance then it’s not going to be apple to apple if one company pay more dividends?? People would prefer stocks that return the dividend and has a higher EPS…
Also, since it’s “per share”, even it has higher EPS, if the per share price is high, is it preferable to have lower share price but higher EPS?
Is higher eps more income for shareholders? Is level of eps changing share price? Eg higher eps more expensive for shares
This is an amazing video. I've been trying to understand EPS for a while now and this video cleared all my doubts.
Most clear and well-explained vidéo I have found.
Thank you for making it clear & simple to understand, Subbed!
does eps mean how much your earn from one share ?
Great tutorial. You will grow fast. All the best
Really appreciate the support! Thanks!
Thank you for this video!
@Rynance Is Bill's bike shop still good investment? Because in the example no dividend payout is shown. Whereas the carpet business does pay a dividend. Isn't that where the real advantage is?
Amazing video! Quick question, when you say "outstanding shares", what do you mean? If a company "gives out" 100 shares to the stock market and 50 of those shares are bought, would the outstanding shares be 100 or 50?
A company's outstanding shares are the total number of shares issued and actively held by stockholders-both individual investors and corporate insiders.
I love the video simple and easy to understand.....Thanks a lot bro!!!🥰🥰🙏🙏🙏
That was a great video. Well explained with those 2 examples. Great video, looking fwd for more videos
Much appreciated!
Very nicely explained.
Thank you.
Thank you for the clear explanation
Do you get annual dividend payout by taking dividend % x market cap?
Here is sub No 13.
Good educational video.
Awesome! Thanks for stopping by!
thanks for explaining better. Do you have course on this?
I am a new subscriber to your channel. Greetings from Plano, Texas, United States. What are the other general parameters to buy a stock? Thanks!
and if the EPS is negative what does it mean?
Thank you! Easy and clear
Hi all , I am a beginner and found that very difficult I want to learn from you.
About the dividends we are subtracting from net income, is it preferred dividends or total?
preferred, I wish you already found it 😬 watch?v=XnKDFQxoA3I&t=365s
Outstanding video! Liked!
Happy you enjoyed :)
Great editing skills. I can learn a thing or two for my edits. I just started around a month ago! Cheers!
Thanks!
Great job! Your videos are the first succesfull step towards investments.
The company I'm being hired to increase sales has a EPS of -0.0400 what does this mean?
Thompson Landing
I’m having a hard time searching a companies earning/profits to input into the equation 1:26
u are amzing that explaning brother thanks so much understood every point u made
Great stock vlog! Very easy to understand.
Another good explanation video my friend. I'm going to have to keep watching your vids and learn the investing basics. :)
I appreciate the kind words :)
@@Rynance You are very welcome my friend. You are doing really well so far! :)
Great communication skills, you should think about narrating books too 👍
Is the EPS paid to a individual or it's just an equity to the company's profit
Thank you you make it easy to understand
Awesome video
God bless you
very clear. Thank you.
I'll be supporting you! :)
I appreciate the support!
Great video happy to support! Subbed!
Thanks!
where do i go to find the "shares outstanding" and also when you say "profit" am i looking at the market cap?
You can find shares outstanding on Yahoo Finance usually. If not there, you will be able to find the number of shares outstanding on the balance sheet in their most recent quarterly report.
For profit, no, it is not market cap. Profit can be found in the income statement in their quarterly reports as well, typically referred to as 'net income'.
@@Rynance yeah im having trouble where to find “preferred dividends” on yahoo financial balance sheet. could it be named something else?
@@chrisfr3sh that will be a little more difficult to find. To find the total paid in preferred dividends, you’ll have to go to the company’s website, go to investor relations, and find their most recent annual or quarterly report. In there, find the ‘statement of cash flows’ and there you can find the total paid in preferred dividends. I hope that makes sense!
Is there any video on P/E Ratio?
extraordinary
Good work man!
Awsome Explanation. keep going
Great vid bro, some really key info people that a lot of people who invest don't know about, people will deffo find this valuable!
Thanks for stopping by!
Awesome
does eps mean how much your earn from one share ?
THANK YOUUUUUUU
Great explanation! Keep up the hustle, subs wil come around the more you post. Here's one more for Team Ry
Thanks for dropping by! I appreciate the support!
The bigger eps the better, correct?
Yep!
Good video
Great job :-)
What if Bill's Bike Shop is valued at $20 per share, and Cameron's is valued at $0.10 / share ? 1 share bills = 200 shares Cameron. That makes it seems like Cameron's business is 200x more effective at producing profit. Or to Bill's 13.33 profit, cameron's capital produced $1600 profit. Not sure that I get it. ;p. And if I do get it, then it is nearly a useless metric. Ah yep, suspicion confirmed. EPS is only meaningful in P/E calculation. Thanks for the vids, they are good. :)
Your dumb
If the share price is lower than explained in the video then the eps will also be lower leaving those 200 stock you get for Cameron less valuable profit wise then bills
Great video
Thank you!