What is a good EPS or earnings per share ratio?

Question

Is earnings per share dividends per share per year?

Answer 1

The PE or the ratio of the Price of a share of stock to the Earnings of each share is one way to evaluate a companies stock. In VERY general terms the lower the PE the better. But there are many exceptions. The PE is a snapshot and says nothing about where a company is heading. Fast growing companies (starbucks or google for example) will carry a higher PE compared to older or slower growing companies.

Companies with high PE's may also have farther to fall in case of a market downturn or in cases where the company does not meet earnings expectations.

Look to the "PEG" as perhaps a better indicator of the value of a companies stock. It is the ratio of the PE to Earnings Growth. Compared to the PE it is more often true to say that the lower number for a PEG ratio is better.

Consider reading further on the motley fool website.

Answer 2

There is nothing called a good EPS but the theory stipulates that it should be sufficient enough to give a dividend equal to 15 year standard deviation of earnings of the Corporation. This the reward for the risk the investor is taking with the stock.

Answer 3

anything with a positive EPS is good.. but if you see the consistence in EPS growth over the previous years then u can be assured of the company u holding to be a sound financial company