While a company's EPS will often influence the market price of its stock, the relationship is rarely inverse. The company's EPS is determined by dividing the earnings by the number of outstanding shares. The market price of each share is immaterial. For example, a company might have 1 million shares of stock outstanding. If that company earns $1 million dollars, its EPS is $1. It doesn't matter if the market price for the stock is $10 per share or $100 per share. Few things in the investment world operate in a vacuum and stock price and EPS are not exceptions. A company with strong earnings per share might see the market price of its stock rise. This higher stock price might create a positive impression of the company's products in the minds of customers, resulting in greater demand, increased sales and ultimately higher earnings. The inverse might also occur. Poor EPS might depress stock prices resulting in lower consumer confidence, fewer sales and ultimately lower earnings per share. But these relationships are circular and not direct.