Earning per unit of common stockholder: A predictor of share prices

• Main Author: Sharif, Nimra
• Publication Date: 2020
• Other Authors: Ahmad, Nawaz, Dos Santos, Maria José Palma Lampreia
• Format: Article
• Language: eng
• Source: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Download full: http://hdl.handle.net/10400.21/12545
• topic: Company's fundamental; Stock prices; EPS

The glaring of the stock market and the frequency of transaction involved there in have prompted the research community to make sophisticated predictions related to its components. In such a situation, the most highligted variable is the market value of the share. The prediction is made to spotlight a model that could give investors a solution to allocate their valuable financial resources. With such outburst of research in this field, no magic key or perfect model is ever identified that could solve the puzzle of share prices fluctuation hence, making this topic ever heated up and hot. This study is an extension of such research studies whereby we have taken Earning per share as a regressor for the market price of the share. Panel statistics of random effect model are applied by taking five companies from the fertilizer sector. Data considered for the study is for a period between 2004 and 2015. The results of the study defined a strong causal linkage between EPS and share prices (t = 18.24125, p<0.01 and R2 = 0.853098). These findings can direct the investors to include EPS in their share evaluation criteria and make a prudent decision in this regard.