It is calculated by dividing net income available to common shareholders by the number of shares outstanding, usually a weighted average over the period. Companies report a basic figure and a diluted figure. Diluted EPS counts shares that could be created from options, convertible securities and similar items, so it is lower and more cautious.
EPS is one of the most watched numbers in an earnings report. Analysts publish estimates before the report, and the stock often moves depending on whether the result beats or misses them. It is also the basis for the price-to-earnings ratio.
It can be distorted. Share buybacks raise EPS by shrinking the share count even when profit is flat. One-time gains or charges can push it up or down, which is why companies also show an adjusted figure.
Check whether a figure is basic, diluted, GAAP or adjusted, look at the trend over several periods and see what drove the change.