# EPS in Australian Financial Review Share Tables?



## Dominover (5 March 2015)

This is a rather menial question but I though there may be some logic behind it.
Can anyone tell me why the Earnings Per Share figures shown in the Australian Financial Review share tables is based on Gross Profit while individual companies report EPS based on Net Profit?

I would have though EPS on net profit would be more relevant which begs the question, why the AFR doesn't report it this way.


----------



## McLovin (5 March 2015)

Got an example?


----------



## tinhat (5 March 2015)

Some analysts calculate EPS on profit before tax because tax can distort the underlying performance. In practice tax credits, offsets, rulings and timing can all make the tax bill of a company jump around from period to period which might distort the underlying performance if used to calculate EPS.


----------



## ROE (5 March 2015)

Dominover said:


> This is a rather menial question but I though there may be some logic behind it.
> Can anyone tell me why the Earnings Per Share figures shown in the Australian Financial Review share tables is based on Gross Profit while individual companies report EPS based on Net Profit?
> 
> I would have though EPS on net profit would be more relevant which begs the question, why the AFR doesn't report it this way.




you sure its not EBITDA? 
EPS by definition has to be net profit after tax


----------



## Dominover (6 March 2015)

I've made a slight error.  This is what happens when I look at these things too late in the evening. 
It isn't gross profit the EPS was calculated of it was just Profit before tax. 

The example I'll show comes from the Australian Financial Review Market Tables.  Here's the relevant section below.
This example comes from JBHifi.




Note that the EPS is 1.27 in the Financial Review (undiluted).  But JBHifi reports an undiluted EPS of 89.44.

Now look at the EPS reported in the JBHifi Half Year Results. 




The Number of shares used to calculate this is below. Also taken from JBHifi Half year results.




Now for the maths.

JBHifi's calculation:

Net Profit After Tax = 88,538,000
Number of shares (undiluted) = 98,988,000.

Thus, 88,538,000 / 98,988,000 = .8944 = 89.44 cents. 

*BUT*

The AFR Calculations show they have used Profit before tax. 

Profit Before Tax  = 127,070,000
Number of shares (diluted) = 98,988,000.  (*this is another point, AFR uses Diluted Number of shares*)

Thus, 127,070,000 / 100,135,000. = 1.2689 = $1.27 .

I thought there may be some explanation for this.. Using diluted share numbers makes sense but not sure why they used profit before tax?


----------



## Ves (6 March 2015)

Dominover said:


> I thought there may be some explanation for this.. Using diluted share numbers makes sense but not sure why they used profit before tax?



You're using half-yearly figures by the looks of it - the similar numbers are a mere coincidence.

The AFR EPS would most likely be based on the last full year results.  Check out the JBH full year results for 2014 FY.  The EPS was 128.4.    It looks like the data provider made some small adjustments,  which is not unusual,  probably for diluted shares as you said.


----------



## Dominover (19 March 2015)

Ves said:


> You're using half-yearly figures by the looks of it - the similar numbers are a mere coincidence.
> 
> The AFR EPS would most likely be based on the last full year results.  Check out the JBH full year results for 2014 FY.  The EPS was 128.4.    It looks like the data provider made some small adjustments,  which is not unusual,  probably for diluted shares as you said.




Sorry for not replying earlier.  Thanks, it seems you are right. 
I can't seem to figure out how they calculate their figures though. AFR's EPS for JBHifi was 127.36 at the time I looked at it. I know it's minor, but I like to try to work these things out.


----------



## luutzu (19 March 2015)

Dominover said:


> Sorry for not replying earlier.  Thanks, it seems you are right.
> I can't seem to figure out how they calculate their figures though. AFR's EPS for JBHifi was 127.36 at the time I looked at it. I know it's minor, but I like to try to work these things out.




Maybe work from the full figures, for the entire company.. then when it comes to see the equivalent in per share, that's when you divide by shares outstanding.

Working from rounded figures, especially on big companies rounding to nearest millions, the difference could be 4 to 10 percent if the combination between earnings and number of shares goes together to force error. e.g. earnings of x.51 is rounded up and shares of x.499 is rounded down.


I guess we're all doing these to see the company's, but especially the shareholder's, performance. So the EPS could be misleading. In terms of owner's benefits, it's very different if the company split its share or bought back its shares; or management raises more equity... these all affects the shares outstanding, and the EPS figure... But if you know the context, your interpretation will be different.


----------

