Hi, I'm a newbie here and also a REAL newbie to investing. I have a beginner question about EPS. I will use CAT as an example
When I add up the net income for one year 927.00 + 823.00 + 816.00 + 882.0 I get 3,548,000,000. So if I divide the outstanding shares which is 635,960,000 I should get the EPS, 5.58. When I look at Google Finance it's said the EPS is 5.19.
Am I doing something wrong? TIA
2007-11-27 10:37:37 · 5 answers · asked by hudson 1 in Business & Finance ➔ Investing
While the number of floating shares may vary some, usually the bigger effect is that of diluted EPS.
Typically, one of the big things diluting the float is the company's convertible debt; either convert. bonds &/or convert. perferred stock. These shares may not convert for a long time, but the diluted EPS assumes that all new shares that can be created in the future via these debt securities are created right now. This dilution would reduce the resulting EPS, just like you noticed in your calculation.
It does rarely happen that a huge stock buyback is instituted amounting to 10% of the float or more. In this case the EPS could become considerably bigger, not smaller.
2007-11-27 15:29:31 · answer #1 · answered by Tom H 4 · 0⤊ 0⤋
The shares outstanding may change from quarter to quarter. So they use a weighted average number of shares outstanding. You're better off looking Yahoo for the EPS for the last twelve months..
2007-11-27 19:00:19 · answer #2 · answered by jeff410 7 · 0⤊ 0⤋
You are not doing anything wrong. The number of shares outstanding was not constant the entire year. The reported EPS uses the average shares outstanding. You used the shares outstanding at the end of the year. If the number of shares had been constant, you number would have been correct.
2007-11-27 18:53:15 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
Maybe. Are you looking at regular EPS or fully diluted EPS?
Look at the annual report and my guess is Google Finance is using fully diluted EPS from the annual report.
2007-11-27 18:46:36 · answer #4 · answered by crazyguyintx 4 · 0⤊ 0⤋
You don;t have to do all that work. You can go to yahoofinance.com; put in the symbol and it provides all the technical information you want. HOW you interpret that information is another matter.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, that is my real last name!
2007-11-27 18:48:56 · answer #5 · answered by Ron Berue 6 · 0⤊ 1⤋