Before you invest in a company, you want to be sure it’s profitable. A way to do this is by calculating a company’s earnings per share. Earnings per share is a widely used metric that tells you how much profit a company makes on per share of its stock. Companies report their EPS on their income statement, which can be an annual (10-K) or quarterly (10-Q) SEC filing. If you’re a prospective investor or trying to deep-dive into your learning, here is everything you should know. Types of EPS There are two types of earnings per share; basic earnings per share and diluted earnings per share. Basic earnings per share is a company’s earnings relative to each common outstanding share. Diluted earnings per share is similar, but it adjusts for dilutive securities before looking at the company’s earnings compared to each common outstanding share. Diluted earnings per share are typically used when doing a deep analysis and are seen as a more accurate reflection of a company’s financial health. This is because it takes into account dilutions, which are when a company issues new shares