Earnings Per Share (EPS): Profit Divided by Shares, Checked Against Real 10-Ks
Earnings per share (EPS) is a company's net income for a period divided by the average number of its shares outstanding over that period. Microsoft earned $133,749 million in the year to 30 Jun 2026 over an average of 7,453 million diluted shares, which is $17.95 of diluted EPS.
Earnings per share turns a company’s profit into something a single shareholder can relate to: how much of the year’s net income belongs to each share. It is one of the headline numbers in a results release, and the bottom half of the P/E ratio. It also changes in ways the profit itself does not, which is what most of this page is about.
How it works
Take the profit that belongs to common shareholders and divide it by the average number of common shares. The profit is net income for the period, less any dividends owed to preferred shareholders first. The shares are a weighted average across the period, not the count on the last day, because a company that bought back stock in March had more shares in January than in December.
The SEC’s investor site gives the short version: net profit divided by the number of common shares. The 10-K and 10-Q do it more carefully, with the weighted average and two versions of the answer.
It is reported for every period. Each 10-Q gives EPS for the quarter and for the year to date; each 10-K from a large company like Microsoft or Nvidia gives it for the full fiscal year and the two years before that as comparisons. That is where the figures on this page come from.
It follows GAAP, the US accounting rules. Companies often publish a second, adjusted EPS in their press releases that leaves out chosen costs. The adjusted figure is not defined by GAAP and is not in the XBRL data behind this page.
Basic and diluted
Basic EPS divides by the shares that exist. Diluted EPS divides by those shares plus the extra ones that could be created from stock options, restricted stock awards and convertible securities, if those would lower EPS. Diluted is therefore equal to or smaller than basic.
For a large company paying staff partly in stock, the gap is small but real. Microsoft’s fiscal 2026 10-K shows an average of 7,429 million basic shares and 7,453 million diluted shares, a difference of 24 million shares, or about 0.3%.
This page uses diluted, because it is the more conservative figure, and the P/E ratio page uses it throughout.
A worked example
Microsoft’s 10-K for the year from 1 Jul 2025 to 30 Jun 2026, filed on 29 Jul 2026, reports:
- net income: $133,749 million
- weighted average basic shares: 7,429 million
- weighted average diluted shares: 7,453 million
Basic EPS = $133,749 million / 7,429 million = $18.0036, printed as $18.00. Diluted EPS = $133,749 million / 7,453 million = $17.9457, printed as $17.95.
Both match the filing to the cent. Microsoft has no preferred stock, so nothing comes off the top.
Now twelve months from a 10-Q. Nvidia’s fiscal year ends in late January, and its latest filing is a 10-Q for the six months to 26 Jul 2026. Its twelve-month diluted EPS is built from three reported figures:
- fiscal 2026 diluted EPS, the year to 25 Jan 2026: $4.90
- plus six months to 26 Jul 2026: $4.85
- minus six months to 27 Jul 2025: $1.84
- equals twelve months to 26 Jul 2026: $7.91
Strictly, EPS figures cannot be added and subtracted exactly, because each period has its own average share count. For a company whose count changes slowly the difference is small, and it is a common shortcut.
Why old EPS numbers change
A stock split changes the share count, so it changes EPS for every period, including past ones. To keep the years comparable, companies restate earlier EPS on the new share basis in their next filings. The profit stays the same; each share is a smaller slice of it.
Nvidia has split twice in five years. Its 8-K of 22 May 2024 announced a ten-for-one forward split, with trading on the new basis from Monday 10 Jun 2024. Its board had declared a four-for-one split on 21 May 2021, with trading on the new basis expected from 20 Jul 2021.
So a single fiscal year can carry two EPS figures in the SEC’s data. Fiscal 2024 was reported as $11.93 in the 10-K filed on 21 Feb 2024. The 10-K filed on 26 Feb 2025, after the split, shows the same year as $1.19. Neither figure is wrong; they are on different share counts.
Accounting changes restate it too. Microsoft first reported fiscal 2017 diluted EPS of $2.71. When it adopted a new revenue accounting standard in fiscal 2018, it restated the prior years, and its 10-K for fiscal 2018 shows fiscal 2017 at $3.25.
Data sites can mix them. A chart that takes each year’s EPS from the filing in which it first appeared will show a cliff at the split. The stock split page goes through the mechanics.
The original data
The data: every diluted EPS figure Nvidia and Microsoft have filed in XBRL, read through the SEC’s company facts on 25 Sep 2026. For Nvidia, each fiscal year’s figure as first filed is set against the figure in the latest 10-K that shows that year, in a CSV of Nvidia’s restated EPS.
Four fiscal years were restated, each by exactly the split in between. Fiscal 2020: $4.52 as first filed on 20 Feb 2020, $1.13 after the 2021 split, 4.0 times smaller. Fiscal 2021: $6.90 as filed on 26 Feb 2021, then $1.73, 4.0 times. Fiscal 2023: $1.74 as filed on 24 Feb 2023, then $0.17, a ratio of 10.2 only because the restated figure is rounded to the cent. Fiscal 2024: $11.93 as filed on 21 Feb 2024, then $1.19, 10.0 times.
Two years never show a second figure. Fiscal 2019 and fiscal 2022 had already dropped out of the three years a 10-K presents by the time the next split came, so their last filed figures, $6.63 and $3.85, are on the old share bases. A ten-year EPS series built from filings alone is not on one basis.
The second table is Microsoft over ten fiscal years, from the same source, with net income and the weighted diluted share count beside EPS, in a CSV of Microsoft’s EPS inputs.
From fiscal 2017 to fiscal 2026, net income rose from a restated $25,489 million to $133,749 million, 5.25 times. Diluted shares fell from 7,832 million to 7,453 million, a drop of 4.8%. Diluted EPS rose from $3.25 to $17.95, 5.52 times: faster than the profit, because the same profit was divided among fewer shares. On the $21,204 million and $2.71 first reported for fiscal 2017, both growth figures would be larger.
When it fails
Buybacks lift EPS without more profit. Microsoft’s share count fell 4.8% over the nine years above, so EPS outgrew net income. A company can raise EPS in a year when profit is flat simply by buying back stock, and “EPS grew” then says more about the buyback than the business.
One-off items. A tax charge, a lawsuit or the sale of a division lands in net income and so in EPS. Microsoft’s fiscal 2018 diluted EPS of $2.13, down from $3.25 the year before, came in a year its income tax expense was $19,903 million against a restated $4,412 million. Add the tax back and pre-tax income rose, from $29,901 million to $36,474 million.
Adjusted against GAAP. Many results releases lead with an adjusted EPS that leaves out stock-based pay, acquisition costs or restructuring. That number is chosen by the company. Compare it with the GAAP figure in the same release before trusting it.
Mixing share bases. As the Nvidia table shows, EPS from before and after a split differ by the split ratio. A screen or chart that mixes them shows a collapse or a surge that never happened.
Negative EPS. A loss gives negative EPS, and the diluted figure then equals basic, because extra shares would make a loss per share look smaller. Ratios built on EPS, like the P/E, stop working.
Beat or miss is not the same as good or bad. Results-day coverage often sets EPS against analysts’ estimates rather than last year. A company can grow EPS and still fall on the day if the estimate was higher; the earnings report page covers that.
Related
The earnings report page explains the release in which EPS first appears, and the step-by-step how to read an earnings report guide shows where to look in it. Retained earnings follows what happens to the profit after EPS is counted. Fundamental analysis places EPS among the other figures an analyst reads, and the P/E ratio page puts a price on top of it.
When I compare EPS across years, I take every year from the latest 10-K rather than from old headlines. After a split the old numbers are restated, and mixing the two makes a company look as if its earnings collapsed.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.