The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
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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