Measures of Profitability
Earnings per share (EPS):
Earnings per share measures how much of a company’s earnings belong to each share of stock. EPS indicates a company’s profitability. It is also used as the denominator in the price-earnings ratio.
Price to earnings (P/E) ratio:
The P/E ratio measures the price investors are willing to pay for a stock per dollar of earnings. It is used by analysts to determine whether a stock is over- or undervalued. Stocks with higher P/E ratios indicate that investors expect higher fu