KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Today, we gonna go back to basics and talk about one of the most fundamental analysis that we look at in investment of a stock...
EARNINGS PER SHARE (EPS)
This is in fact one of the most carefully followed metrics in investing.
Earnings per share generally means the portion of the company's profit that is allocated to each outstanding share of common stock.
It is what investors look at to gauge the profitability of a company.
EPS = net income - dividend to preferred shareholders
average outstanding shares
In practice, the weighted average number of shares is more accurate because the number of shares outstanding can change over time.
There is also the diluted EPS which takes into consideration of the shares of convertibles or warrants outstanding in the outstanding shares number.
Here is an important note to EPS that we feel readers/investors should look into when talking about EPS.
- Two companies could generate the same EPS number, but one could do so with less equity, thus the company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company in theory.
- Investors need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
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