FoundationsMAD Academy0:45Fundamentals

The Denominator Does the Work

EPS can rise while profit falls, because the share count is half the fraction — and buybacks move it deliberately.

0:45 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Earnings per share can rise while the company earns less.
  2. 0:05The fraction. Profit on top, share count underneath. Either one can move the result.
  3. 0:14The buyback effect. Profit falls five percent, the count falls twelve, and EPS still rises.
  4. 0:24Basic versus diluted. Diluted assumes every option and convertible turns into shares. Use it.
  5. 0:32The check. Look at net income and the share count separately before reading EPS growth.
  6. 0:40Read the numerator and denominator separately.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Denominator Does the Work — MAD Academy Training Video · MadStockAlerts