As already mentioned, EPS stands for ‘Earnings Per Share’, which means that the metric is derived from two crucial points in the financial statements of the issuing company - earnings, and number of shares. 

Thus, The formula for calculating EPS is:

EPS = (Net Earnings / Number of Outstanding Shares).

To further break down the formula:

• Net Earnings: This represents the company's profit after all expenses, taxes, and other deductions have been accounted for. It is often found on a company's income statement
• Number of Outstanding Shares: This is the total number of shares of common stock that have been issued and are currently held by investors. This information can be found in a company's financial statements or in regulatory filings

EPS is an important metric as it shows how much profit a company generates for each of its outstanding shares. Investors use EPS to evaluate a company's financial health, profitability trends, and to make comparisons with other companies in the same industry or sector. 

Higher EPS generally indicates greater profitability on a per-share basis, which can be a positive sign for investors.

However, it is important to consider that the EPS figure alone is not a reliable indicator of a company’s growth prospects over the long run, as many short-term operational issues can impact the profitability of a company down the line. 

Apple’s (APPL) EPS growth over the years. 

In general, EPS is not the first metric stock traders look at when picking which stock to buy. While a company may be profitable and their per-share earnings might look impressive, many other factors can interfere with the earnings growth of a company and shift the EPS into a negative value - signaling net losses. 

However, this does not mean that the EPS is a negligible metric in stock trading, Here are a handful of applications for EPS:

• Assessing profitability - EPS is a clear indicator of profitability on a per share basis and is a good metric to use when comparing companies from the same industry
• Analyzing investment opportunities - EPS plays a crucial role in valuation models and investment analysis. For example, the price-to-earnings (P/E) ratio, which compares a company's stock price to its EPS, helps investors determine if a stock is overvalued or undervalued
• Estimating future dividends - Companies often use a portion of their earnings to pay dividends to shareholders. By analyzing a company's EPS, investors can get insights into its ability to pay dividends and potentially predict future dividend payments
• Tracking earnings guidance - Companies may provide earnings guidance to inform investors about their expected future earnings. By comparing actual EPS to these forecasts, investors can gauge whether a company is meeting or exceeding its financial targets

• Investors and traders use many different financial metrics to compare and evaluate companies to pick the best stocks 
• The EPS, or earnings per share, shows how much a company generates in earnings per its single outstanding share
• EPS can be used to assess risk, analyze investment opportunities and estimate future dividends 
• Earnings per share and the price to earnings ratio are two of the most popular metrics used in stock trading