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Earnings per Share
The next factor in your analysis will be earnings per share (EPS). You will also find the EPS under the Revenue/EPS Summary page (see Figure 8).
The Importance of Earnings per Share
EPS tells you how much money the company is making in profits per every outstanding share of stock. The higher the EPS is, the more money your shares of stock will be worth.
Scoring Earnings per Share
- Pass—Give this factor a passing score if the stock has increasing EPS over the last four quarters and increasing year-over-year EPS totals.
- Fail—Give this factor a failing score if the stock has decreasing EPS over the last four quarters and decreasing year-over-year EPS totals.
Looking at the EPS numbers for GOOG in Figure 8, it clearly should receive a passing score. For fiscal year 2006, the EPS increased each quarter as did the year-over-year EPS growth.
Earnings per Share: PASS
Figure 8—Earnings per Share (EPS) Results
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