Earnings Per Share (EPS) is commonly used to gauge a company's profitability and is a fundamental metric in financial analysis. It is calculated by dividing the company's net income after taxes by the total number of outstanding shares of stock. For instance, if a company has a net income of $1 million and 1 million shares outstanding, its EPS would be $1. This measure helps investors understand the value a company provides on a per-share basis, which is crucial for comparing profitability across companies or industries. EPS figures are often reported on a company's income statement and used in metrics such as the price-to-earnings (P/E) ratio to assess stock valuation.