EPS stands for Earnings Per Share, which is a financial metric used to measure a companys profitability. It is calculated by dividing a companys net profit by the number of outstanding shares of its common stock. EPS is one of the many indicators used to pick stocks, and it helps investors determine the value of earnings and how investors feel about future growth.

EPS is widely used as a way to track a companys performance, but shareholders do not have direct access to those profits. A portion of the earnings may be distributed as a dividend, but all or a portion of the EPS can be retained by the company. Shareholders, through their representatives on the board of directors, would have to change the portion of EPS that is distributed through dividends to access more of those profits.

EPS is an important profitability measure used in relating a stocks price to a companys actual earnings. In general, higher EPS is better, but one has to consider the number of shares outstanding, the potential for share dilution, and earnings trends over time. EPS numbers are most useful when evaluated along with other metrics, such as the price/earnings (P/E) ratio and the return on equity (ROE) .

Although EPS is considered a powerful financial tool, it has its share of drawbacks. For example, cash flow is not factored into EPS calculation, which means a high EPS may still prove ineffective for gauging a companys solvency.

In summary, EPS is a financial metric used to measure a companys profitability by dividing its net profit by the number of outstanding shares of its common stock. It is widely used as a way to track a companys performance, but shareholders do not have direct access to those profits. EPS is an important profitability measure used in relating a stocks price to a companys actual earnings, but it has its share of drawbacks.