It is a measure of the net income earned on each share of common stock.  It is computed by dividing net income by the number of weighted average common shares outstanding during the year. a Measure of net income earned on a per share basis provides a useful perspective for determining profitability.                            

EPS = Earnings Available for Equity Shareholders/Number of Equity Shares Outstanding.

A company's profit divided by its number of common outstanding shares. If a company earning$2 million in one year had 2 million common sharesof stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term.