How to choose stocks according to earnings per share?

Earnings per share refers to the ratio of net income this year to the total number of ordinary shares. Depending on the number of shares, there are fully diluted earnings per share and weighted average earnings per share. (The following is an episode for everyone. How to choose stocks according to earnings per share? Pass the information, I hope you like it. )

How to choose stocks with earnings per share

Earnings per share refers to the ratio of net income this year to the total number of ordinary shares. Depending on the number of shares, there are fully diluted earnings per share and weighted average earnings per share. Fully diluted earnings per share refers to the total number of ordinary shares at the end of the calculation, because newly issued shares are generally issued at a premium, and new and old shareholders * * * share the income before the company issues new shares. Weighted average earnings per share refers to the data that the total number of shares is weighted monthly to calculate the number of shares, because the capital and assets invested by the company are different, and the basis for generating income is also different.

Earnings per share is the most important financial indicator to measure the profitability of listed companies. It reflects the profitability of common stock. In the analysis, companies can be compared to evaluate their relative profitability; Can be compared in different periods to understand the changing trend of the company's profitability; Can compare business performance and profit forecast, and master the management ability of the company.

Generally, earnings per share can be calculated according to the formula of earnings per share, but all calculations are current data. How can we predict the earnings per share of stocks?

The basic method is to calculate the annual growth rate q of earnings per share according to the earnings per share of previous years. Then according to the formula:

Earnings per share after the nth year = Earnings per share for the current year × (1+q) n

But the premise of this algorithm is to ensure that earnings per share can grow steadily every year. Generally speaking, some modifications are needed.

It is difficult to predict the future earnings per share of stocks. To tell the truth, no one in the company can predict next year's income, and can only judge it according to the overall market situation.

Earnings per share (EPS), also known as earnings per share and after-tax profit per share, refers to the ratio of after-tax profit to total share capital. It is the enterprise net profit that ordinary shareholders can enjoy or bear per share.

Earnings per share are usually used to reflect the operating results of enterprises and measure the profitability and investment risk of common stocks. It is one of the important financial indicators for investors and other information users to evaluate the profitability of enterprises and make relevant economic decisions.

In the income statement, Article 9 lists the items of "basic earnings per share" and "diluted earnings per share".

Among many tools for basic analysis of stock investment, EPS is also one of the most commonly used reference indicators, just like discounted cash flow method, P/B ratio and P/E ratio.

Earnings per share reflect the after-tax profit created per share. The higher the ratio, the more profits will be created. If the company only has ordinary shares, the net income is after-tax net profit, and the number of shares refers to the number of ordinary shares in circulation. If the company still has preferred shares, the dividends distributed to shareholders of preferred shares shall be deducted from the after-tax net profit. Refers to the proportion of net income to the total number of ordinary shares this year.

Earnings per share is the most important financial indicator to measure the profitability of listed companies. It reflects the profit level of common stock. In the analysis, we can compare companies to evaluate their relative profitability. We can compare in different periods to understand the changing trend of the company's profitability. Can compare business performance and profit forecast, and master the management ability of the company.

How to choose stocks according to earnings per share? Related articles:

★ What are the main financial indicators for choosing high-growth stocks?

★ What are the main aspects of securities investment industry analysis?

★ Illustrate the similarities and differences between top-down processing and bottom-up processing in perception with examples.

★ What is the theme investment?