Earnings per share are most useful in comparing the earnings performance of one company with another is False.
Earnings per share is not a useful way to compare the earnings performance of one company to another, as there are large differences in the number of shares outstanding between companies. Value stocks are stocks that are highly valued relative to their current earnings.
Earnings per share are computed as net income available to common shareholders divided by the weighted average number of common shares outstanding. Preferred dividends must be deducted from net income as this amount is not available to common shareholders. EPS is not a good measure of performance because it does not consider the opportunity cost of capital and can be manipulated by short-term actions.
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