Earnings Per Share
Earnings per share is net income attributable to common, divided by weighted-average shares — basic or diluted.
Definition
Earnings Per Share refers to average shares — basic or diluted. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Equity risk premia compress or expand with earnings paths and factor regimes. When average shares — basic or diluted shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what earnings per share is saying. If average shares — basic or diluted moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Separate index beta from residual; know the sector and factor loadings of the claim. Prefer a short written null hypothesis for Earnings Per Share: what would falsify the current reading in the next window?