One question!

sam_kuw · #1 18th April 2007, 12:04 PM

Hi friends,

I just started learning about investing & shares.
It would be helpful if anyone could clear this out -

Suppose a company's share costs Rs. 500 and the EPS was 60.
Does this mean a shareholder will get Rs.60 per share annually?

If yes the annual returns is 12%. Right?

Someone kindly clear my doubts.

Sameer

ashutosh.krsrivastava · #2 18th April 2007, 12:37 PM

Quote:

Originally Posted by sam_kuw

Hi friends,

I just started learning about investing & shares.
It would be helpful if anyone could clear this out -

Suppose a company's share costs Rs. 500 and the EPS was 60.
Does this mean a shareholder will get Rs.60 per share annually?

If yes the annual returns is 12%. Right?

Someone kindly clear my doubts.

Sameer

Hi sameer,
Well EPS means latest earning figure of the company divided by no of shares the company has issued (i guess). It has nothing to do with thhe amount the shareholder will get: Shareholder will get only the divident(which is a part of company's earning) the company gives which may be 50%, 100% etc(it may be any amount percentage, right from lowest percentage to highest .....) which will come to tune of Rs 5, Rs 10 for the share value of Rs 10.

it also means that the company is in good position as per EPS of 60. EPS of 10 may mean ok company. eps of 1 may mean bad company. It all depends on the reference i.e. against which company you are comparing.

A company having eps of 60 is definately in good position than the other having eps of 40 which in place is good than the company having eps of 20 ....
hope your doubts have been cleared.
regards
ashutosh

sam_kuw · #3 18th April 2007, 01:16 PM

Thank you for your reply ashutosh.
So, does that mean an investor cannot expect any real income from his investment in the Co.
And is the percentage of dividend declared on the book value of the shares or the earnings of the Co?

Thank you,

Sameer

ashutosh.krsrivastava · #4 18th April 2007, 03:43 PM

Quote:

Originally Posted by sam_kuw

Thank you for your reply ashutosh.
So, does that mean an investor cannot expect any real income from his investment in the Co.
And is the percentage of dividend declared on the book value of the shares or the earnings of the Co?

Thank you,

Sameer

Well strickly speaking, investor cannot expect any real income from investment in the co.. The main method to earn money from shares and market is to black. like blacking tickets of a movie. if demand for movieticket is more the blackie increases the price. Same way if i bought Mangalam cement at 100 annd the demand of share increases (due to n no of reasons like increased profit, strong sectoral growth etc.) the price will increase and if it reaches say 150, i sell it and earn rs 50..

And the percentage of divident is declared on book value of share and not on the earning of the co.
(Btw it is sometimes said that the price of share is a perception among the market of all the current money value of all the divident the company is going to pay in over its lifetime(rate of interest included in calculating current moneyvalue of divident).
ashutosh

sam_kuw · #5 18th April 2007, 04:37 PM

Thank you Ashutosh for your valuable respone.

Now I get it - If I need to make money I should consider Trading in stocks.

Thank you again

Sameer

Similar Threads for: One question!
Thread	Thread Starter	Forum	Replies	Last Post
Delivery question?	marcus	Brokers & Demat Matters	2	13th March 2006 10:16 PM
Help me with my question please...	vsr	Brokers & Demat Matters	2	14th February 2006 10:23 PM
Question	uppilivasu	Introductions	0	13th September 2004 09:50 AM