Meaning of EPS and PE ratio in the share market

EPS is Earnings per share and PE is Price Earnings. These are two oft repeated expressions in the stocks evaluation and discussions

Earnings per share is the total net earnings ( net profit) of the Company divided by the number of shares of the Company

It is nothing but the earnings ( net profit ) per unit share held by the investor.
Example, if net profit of the Company is Rs 25 Crs, the Company has a total share of Rs 10 Crs and a total of 10 Cr shares, each share being of Rs 1 , then the EPS is Rs 25 Crs/ 10 Crs =Rs 2.5 per share.

Price earnings ratio or the PE multiple as they call it is the Price divided by the earnings per share. This will give the number of time , price is in relation to the EPS. Lower the multiple , more attractive is the price of the share.

Reverse of this is the return on equity shares, that is EPS divided by price of the share multiplied by 100 gives the return % on equity
Let us assume that the share price is Rs 50, the PE ratio is Rs 50/ 2.5 = 20
Return is Rs 2.5*100/50=5%