Hi people
Yesterday during a meeting we held at ICPAK Center by Youth Fund ,I was shocked to know that majority of young enterprenuers are shying away from Youth Funds and according to Youth Funds officials they are blaming entities like media,for not aggressively informing the people.and also most investors have poor skills on records managements and business planning
Otherwise let us discuss how to determine EPS and how it help one make an informed choice to invest in mainly listed firms
Earnings per share (EPS) is found by taking the net income and dividing it by the basic or diluted number of shares outstanding, as reported.
EPS is one of many things that can be used as a basis for determining an intrinsic value for a stock/share.
EPS and its Impact on Company Revenue Estimates
Many companies provide estimates of how much they expect to earn for the current quarter as well as the current year and is upon investors to pay very close attention to this "guidance," as it is known.
From that, you can run a simple mathematical models to come up with an estimate of EPS, which will help determine which firm is good to invest in
Thus ,when a company reports its results, people should quickly concentrate on the bottom line, the EPS. If the company "beats expectations," that means the EPS happened to be above prediction. while,if it "missed earnings," that means the EPS will be below the consensus.
Be careful
Because EPS is, essentially, net income, it is fairly easily manipulated. Management has control over the timing of some expenses and some revenue, and can therefore adjust the EPS number. while hiding massive debts below
I will be hard pained to point out one firm in Industrial and Allied sector listed on NSE that from a keen look was involved in manipulating its share rise hence strengthening its EPS but heat has got up and recently had to announce a profit warning disclosure
Thanks
Gibson Amenya
Enigma Consultants Kenya Limited
Email: gib.amenya@enigma.or.ke
Email:info@enigma.or.ke
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