How to Calculate Earnings Per Share in the Stock Market

If the stock market makes your heart race when the opening bell rings; if your pulse quickens and your hands become sweaty, then you need to know the calculations the big boys rely on to put their "smart money" to work. One of the big things they look at is something called earnings per share. Here is how to calculate it so you can beat the market.

Instructions

Difficulty: Easy

1. Go to an investing site such as thestreet.com, cnbc.com, or Yahoo's finance section. Then type in the symbol of the company you'd like to calculate their earnings per share. If you do not know the symbol, each site is equipped with a "symbol lookup." This is usually found to the right of the input of the symbol. Type in the name of the company and choose the correct result.
2. Click on the balance sheet for the company. Every company must list its financials for the public to see quarterly. This is known as earnings. You are interested in the full year's earnings (profits minus cost). Notate that number.
3. Look for the number of "outstanding shares" a company has according to the financial page. This is also known as the "float" and according to law must be notated by the company.
4. Divide the yearly earnings total by the number of outstanding shares and that is your price to earnings ratio. So if the earnings are 1 million dollars and there are 1 million shares, the company's earnings are 1 dollar a share. Truthfully most financial pages list this along with the quote of the company. This is known as the "p/e."