Good earnings per share, or EPS, in the stock market depends largely on expectations.

What Is Earnings Per Share? -- The Motley Fool

Both Wall Street analysts and corporate executives generally identify a number or range expected for profits, or earnings. Investors generally cheer a stock that meets or exceeds those estimates, but they might sell shares to punish a company that misses its target. Good earnings can also be relative, based on market and economic conditions for corporate profits. Earnings are a measure of a company's profits over a period of time. Companies that list shares in the public markets disclose earnings results quarterly and annually.

One way EPS is evaluated is in comparison to a year-ago period. It is generally a positive development when earnings exceed performance from the year-ago period. When earnings fall below year-ago results, companies typically offer some explanation for the shortfall, and it is up to investors to decide how to treat the stock.

One of the most transparent ways to determine whether a company has good earnings is to measure results against third-party expectations. Leading up to an earnings release, financial analysts who follow that company or sector generally estimate profits. Many corporate executives also issue estimates, but they might release those figures in an attempt to sway Wall Street analysts, according to a article in USA Today.

When actual results fall short of analyst estimates, it is not uncommon for a stock price to suffer. EPS is typically considered good when a corporation's profits outperform those of similar companies in the same sector. Bancorp produced earnings and revenues that exceeded the performance of its competitors in the years following the global economic crisis of Indeed, for more than two years after the recession, the company continued to increase its earnings in nearly every quarter.

As a result, credit ratings agency Standard and Poor's upgraded its rating on the bank, according to Bloomberg. It is difficult to predict how investors will treat a stock during earnings season. Sometimes -- even when EPS is good -- investors sell shares. There are also instances when investors reward a stock even though earnings underwhelm.

In August , high-end retailer Tiffany lowered its earnings expectations for the entire year. Investors were relieved that the downward-revised forecast was not any worse, given regional economic weakness.

The stock climbed more than 7 percent as a result, according to The Wall Street Journal. Geri Terzo is a business writer with more than 15 years of experience on Wall Street. Throughout her career, she has contributed to the two major cable business networks in segment production and chief-booking capacities and has reported for several major trade publications including "IDD Magazine," "Infrastructure Investor" and MandateWire of the "Financial Times. Terzo is a graduate of Campbell University, where she earned a Bachelor of Arts in mass communication.

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Visit performance for information about the performance numbers displayed above. Skip to main content. What Is Considered a Good EPS in the Stock Market? More Articles How to Read EPS on Stock Quotes Stock Analysis: What Is a Price Target?

What Does a Stock Trading at 20X Earnings Mean? What Is a Good Price-to-Earnings Ratio?

How Do the Prices Change in the Stock Market? What Does Price Earnings Mean? Identification Earnings are a measure of a company's profits over a period of time. Expectations One of the most transparent ways to determine whether a company has good earnings is to measure results against third-party expectations. Competition EPS is typically considered good when a corporation's profits outperform those of similar companies in the same sector.

Consideration It is difficult to predict how investors will treat a stock during earnings season. References 3 USA Today: How Companies and Investors Play Earnings' Expectations Games; Matt Krantz The Wall Street Journal: Tiffany Shares Jump on Weak Results? It's All About Expectations Bloomberg: Resources 1 Bloomberg Businessweek: Profits Matter Most for U. Stocks as Economy Fixation Dims.

Earnings per share (EPS) Definition - fesajina.web.fc2.com

Photo Credits american flag image by Brett Bouwer from Fotolia. About the Author Geri Terzo is a business writer with more than 15 years of experience on Wall Street.

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