Purohit,
Just having a higher P/E ratio doesnt make a company better. For example Facebook has a higher P/E than Amazon, but many people will still consider Amazon as a better company to invest in, since FB's high P/E has a lot of risk tied to future performance.

If the EPS goes down, that means the companies profitability/earnings is going down, which means the share price will also go down. Rarely will you see a company in the stock market whose share price stays the same if its profits decreases. Even a company such as Infosys faced such a problem recently with decreasing margins.

Keep in mind that EPS is not the same as dividends. EPS is just the total net income divided by the number of outstanding shares.
This is the formula -
Revenue - CoGS = Gross Margin - Opex = Operating Income - Tax - Interest = Net Income