Learn the stock market › Fundamental analysis: the basics › Lesson 4 of 8
What are earnings per share?
How it is calculated
Divide profit after tax by the number of shares. Mastercard in 2025: $14,968 million / 906 million shares = $16.52.
| Year | Profit | Shares | Earnings per share |
|---|---|---|---|
| 2025 | 14,968 | 906 | $16.52 |
| 2024 | 12,874 | 927 | $13.89 |
| 2023 | 11,195 | 946 | $11.83 |
| 2022 | 9,930 | 971 | $10.22 |
The share count is an average over the year, because it can change along the way. It also includes shares that could be added through things like employee stock options. That is why a report can show two numbers, basic and diluted. The table shows diluted.
Why not just look at profit?
You own shares, not the whole company. Profit can grow while your part of it shrinks, if the company issues many new shares. It can also go the other way.
From 2022 to 2025, Mastercard's profit changed by +51%, while its earnings per share changed by +62%. The gap comes from the share count, which fell from 971 million to 906 million as the company bought back its own stock.
What the number is used for
EPS is what the P/E ratio is built on: the price divided by earnings per share. It is also one of the first numbers the market checks against its expectations when a report comes out.
When the number misleads
- One-offs. A big sale or a write-down moves the number for a single year, without the business changing.
- Stock splits. After a split there are more shares and the number is lower, though the company hasn't changed. Reports restate earlier years so they can be compared. How the stock tends to do afterwards is in the study of stock splits.
- Different companies. One company at $5 and another at $50 doesn't tell you which earns more, because they have different numbers of shares. Compare one company over time, or use P/E.
- Losses. With a loss, the number is negative.
Test yourself
A company earns $100 million and has 50 million shares. The next year it earns the same but has bought back 10 million shares. What happens to EPS?
How the price has moved: the Mastercard stock page.