2) Fundamental Analysis
EPS is like a company's 'report card' that every investor watches. Each quarter, all eyes are on the EPS number: up or down? Beat or miss expectations? This single number can send stock prices soaring or plunging.
EPS (Earnings Per Share) is a company's net income divided by the number of outstanding shares. EPS shows how much profit each share 'owns.' If a company earns Rp1 trillion with 10 billion shares outstanding, the EPS is Rp100.
Imagine a group of roommates splitting pizza profits. The profit-pizza is divided equally by the number of people. If the profit is big but the group is small, everyone gets a large slice (high EPS). If the profit is the same but the group is huge, slices are tiny (low EPS). EPS is your 'profit per person' -- or rather, per share.
BBCA has an EPS that keeps growing year after year, reflecting consistent profit growth. If BBCA's EPS last year was Rp350 and this year is Rp400, that's about 14% EPS growth. This is what investors look for: companies whose EPS keeps growing because the business is expanding.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Fair Value CalculatorWhat's the difference between basic EPS and diluted EPS?
Basic EPS is calculated using currently outstanding shares. Diluted EPS factors in additional shares that could potentially be issued (from stock options, convertible bonds, etc.). Diluted EPS is always lower or equal to basic EPS because the denominator is larger.
Does negative EPS mean a company is definitely bad?
Not necessarily. Startups or companies making heavy investments can have temporarily negative EPS. Amazon was unprofitable for years before becoming a giant. What matters is understanding WHY the EPS is negative and whether there's a path to profitability.
