Earnings per share in stock exchange market

These days’ people are making many investments in stock exchange market. There are many methods of checking or evaluating the market and different stocks. Most simple and widely used method is earning per share method. We can simply compare tow stock based upon their earrings.

A share price only indicates the price that we were paying at the time of purchase of the shares it does not tell us the whole cost that we will bare in holding that stock for a long period. For the long-term value of the stock, you have of calculating price to earnings ratio and earnings per share.
Formula = Net Earnings over outstanding stares
Earnings per share are externally very simple looking ratio but it is very difficult to mater full. It enables a common individual to understand the pricing of the stocks. If indicates the portion of the company earnings that are given away to the issued shares. In simple words, it tells us that what is company is paying us after taking our investment. It is necessary for a common can understand this ration because it is the main thing for their investment decision making in the stock market. If they do not learn this then it is very difficult for them to make a successful investment decision.
It is also very vital for making a comparison in different companies’ stocks. There are many companies, which belong to the same industry but have different stock valuations. We can compare these companies with the help of earnings per share ratio can make investment decisions about them. It is the most simple and easy technique for stock valuation purpose. Without understanding this, we cannot gain success in the stock market. It is not a rock science it just requires a common understanding of the market.
In all other method, you have to consider many different factors and the answer will not consider very accurate. Earnings per share ration make it easy for you to find a desire stock from the market. Its results are also very accurate results as compare to other methods.
People mostly take purchase decision based upon the price of the stocks. This very wrong approach you should consider the other side also. You should evaluate the earning side. Low price does not help you if it pays less earning as compare to little up prices. Therefore, always think ahead to be successful in this market.
It is very simple in execution you only need to know two factors only.
1. Net income
2. Outstanding shares
There is no other thing in this process. This is most important and basic ration for investment in stock exchanges. Therefore, you should learn and it properly and practice it for successful execution in the practical market. If you jump unprepared in the stock market then market will repel you quickly and you will lose all your pernicious investment. To be successful you should be aware of all market toll and methods.