When a company’s earnings per share (EPS) is negative but its sales per share is positive, it typically indicates that while the company is generating revenue, it is incurring losses overall. Here’s what this could mean:
- Positive sales per share: The company has sales revenue and is actively selling products or services. Sales per share is calculated by dividing total sales revenue by the number of outstanding shares.
- Negative earnings per share: The company is spending more money than it is earning, resulting in a net loss. EPS is calculated as (net income – dividends on preferred stock) divided by the average number of outstanding shares. A negative EPS reflects a lack of profitability.
This situation often occurs in companies that are in early growth phases or heavily investing in expansion, research, or marketing. It could also be a sign of operational inefficiencies or issues with cost management