Earnings per share (BPA / EPS)

Earnings per share (EPS, or BPA — bénéfice par action in French) measures net profit attributable to ordinary shareholders per share in circulation, and is one of the most widely used valuation benchmarks for listed companies. Basic EPS = (Net profit − preference dividends) / Weighted average ordinary shares outstanding. Diluted EPS adjusts the denominator to include potential shares from dilutive instruments (options, warrants, convertible bonds), reflecting the maximum dilution that would occur if all convertible instruments were exercised. IFRS-compliant companies must disclose both basic and diluted EPS under IAS 33.

The EPS is the base of the price-to-earnings ratio (P/E), one of the most commonly used equity valuation multiples. P/E = Share price / EPS; Equity value = EPS × P/E. The P/E multiple is most relevant for financial companies (banks, insurance) and non-leveraged entities where capital structure does not distort comparisons — for most operating companies with debt, EV/EBITDA is preferred because it is capital-structure-neutral. The normalized EPS — excluding non-recurring items and using a normalized tax rate — is the relevant basis for valuation comparisons.

For unlisted Franco-Swiss SMEs, EPS is calculated as a management information tool and used in valuation by reference to listed comparable company P/E multiples, adjusted for size, liquidity and specific risk. A Swiss SA with 30,000 shares, CHF 900,000 net profit and a sector P/E of 12x implies an equity value of CHF 30 × 12 × 30,000 = CHF 10.8 million, providing a cross-check against DCF and multiple-based valuations.

At Hectelion, we compute and analyze normalized EPS in our business valuations and use P/E multiples as a control check in Franco-Swiss SME valuation.