Eli5 How does EPS(earnings per stocks) work?


I have a stock who has earnings of $3.54 eps for this quater but Robinhood is only paying me $1.

In: 1


EPS is a measure of company performance (net profits/number of shares). It is not a promise of payment etc.

Some companies make regular distributions to shareholders through dividends. This will be declared (typically every quarter) and is up to the discretion of the board of directors. The dividend payment per share is NOT related to the EPS.

Earnings per share, not earnings per stocks.

Those are the company’s profits, divided by number of shares.

What you receive are called dividends. Companies don’t pay out all of their profits as dividends. They typically retain most of their earnings as a kind of war chest, to cover cashflow during slower times of year or slower years (recession); to invest in R&D or capital expenditures like new factories; or to use for acquisitions. Some of the profits may get paid out as dividends to shareholders, too, but not all companies do — especially ones in more of a growth phase.