Term · Profitability & Growth
Basic EPS / undiluted EPS
In briefUndiluted earnings per share divides the period profit attributable to ordinary shareholders by the time-weighted number of ordinary shares. In the case of frequent capital increases, it can fall even though total profit rises.
Definition
Undiluted earnings per share allocates the period profit attributable to ordinary shareholders to the weighted average number of outstanding ordinary shares.
How it is calculated
Formula. Basic EPS = profit attributable to ordinary shareholders ÷ weighted average ordinary shares.
Why it matters for small caps
In the case of frequent capital increases, the weighted number of shares is decisive. Earnings per share can fall despite rising total profit.
Common misreadings
- The number of shares as of the reporting date is not automatically the correct denominator. Preferred dividends and pro-rata capital measures must be taken into account.
In the process
Frequently asked
What is undiluted earnings per share?
It shows which share of profit is arithmetically attributable to a single ordinary share. The basis is the profit attributable to ordinary shareholders.
How is Basic EPS calculated?
You divide the ordinary shareholders' profit by the weighted average number of shares in the period. Preferred dividends and pro-rata capital measures feed into the denominator.
What mistake commonly happens in the EPS calculation?
Anyone who simply takes the number of shares as of the reporting date calculates incorrectly. Intra-year capital measures and preference claims must be taken into account.
Related terms
Sources
Primary
IFRS Foundation – IAS 33 Earnings per Share
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.