Warren Buffett's Three Favorite Books

by Preston Pysh

Shares Outstanding: This is simply the total number of shares the business is broken down into. For example, JNJ is 2.73 billion shares. This is a really important number to know when you want to know what the total value of a business is being traded for. Since the current market price is $64.95 a share, we simply multiply the market price by the shares outstanding to get an idea of what the crazy traders think the value of the company is. In this case, current market traders believe the value of JNJ is $177.3 billion. As you learned in Part II of this book, that’s the market price, not the intrinsic value. EPS:. This means earnings per share. This number is the company’s total earnings for the year divided by the number of shares outstanding. This number is really important because it tells you how much money your single share will make every year. This number should be displayed on the first page you see after entering the ticker symbol you are researching.