Revenue (the top line) is all the money a company brings in from selling its products or services. Net income (the bottom line) is what remains after deducting all costs, including production, operations, interest, and taxes.
The journey from revenue to net income reveals how efficiently a company operates. A company with $10 billion in revenue but only $100 million in net income is keeping just 1% of each dollar — which might indicate high costs, heavy debt, or thin margins.
EPS divides net income by the number of shares outstanding, giving a per-share view of profitability. This makes it possible to compare companies of vastly different sizes. When companies report quarterly earnings, analysts focus intensely on EPS relative to estimates.
Beating EPS estimates usually causes the stock to rise; missing them often triggers a decline. Earnings season — the period when companies report quarterly results — is one of the most active and volatile times in the stock market.
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