0

For example, I want count average EPS for 10 year for company and this company has stock split (2 to 1) in this 10 years.

Do I need to take this into account calculating average EPS for this 10 years or not?

P.S. I asked this question to several people who works in finance, and they gave me opposite answers.

1 Answer 1

0

If you want to compare with today's price, divide the EPS before the split by the ratio of the split (by 2 in this case). If you want to compare with the old price, do the reverse and multiply EPS by 2 after the split.

Splits are definitely a factor when calculating EPS, which is in dollars. They're not a factor when calculating the P/E ratio (or the similar earnings yield), because the stock price is already adjusted for. I'd recommend using those for historical analysis, so you don't have to worry about splits.

2
  • And if I dont't want compare with old or current price, but want just know average EPS for 10 years - do I need multiply on split value before or after (or this not matter)?
    – vaan
    Apr 9, 2019 at 15:50
  • EPS is not a standalone metric, it always depends on price. I can tell you my company has EPS of $10, but unless you know the stock price, you can't tell whether that's good or not. E.g. the stock could be $20 per share, or it could be $10,000.
    – Earth
    Apr 9, 2019 at 16:04

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .