Simply put, earnings per share (EPS) is a metric that indicates how much was earned by the portion of a company represented by one share of stock, during a given time. Since companies vary widely in size and earnings, and since they all issue a different number of shares, knowing the ratio of earnings to share helps put a company’s earnings in perspective.
Earnings per share metrics are arrived at by dividing the company's net income by the total number of outstanding shares. The higher the number, the more potentially valuable each share of stock. When a company reports a net loss, its earnings per share will also be a negative number.
This measure is of great importance to income-focused investors looking for a steady source of income.  The metric also provides insights on whether there is room for a company to increase its current dividend. However, the metric should never be analyzed in isolation when making critical investment decisions. Instead, it should be compared with the industry average to get a clear idea of how the company is performing relative to other companies, subjected to the same macroeconomic conditions.