Why Profit Growth Can Shrink Earnings Per Share
Summary
Hollow Point Trading shares a short lesson on why rising company profits do not always mean higher earnings per share. The example compares $10 million in common earnings across 5 million shares with $12 million across 8 million shares, showing how share count affects basic EPS.
https://youtu.be/ZT5BNVQ57AI
Profit growth can disappear on a per-share basis #Shorts
A company can earn more while each share earns less. In a hypothetical year, income available to common shareholders is ten million dollars, with five million weighted average common shares. Basic earnings per share is two dollars. Next year, common earnings rise to twelve million dollars, but weighted average shares rise to eight million. Basic...
