In order to estimate EPS, the easiest method is to simply remember that what you are analyzing is a business – it has revenues and costs. Estimates of future revenues and costs will translate into estimates of EPS (and with a little more work, estimates of free cash flow)
Appropriate methods for forecasting revenues and costs depend heavily on what type of company (i.e. what industry) you are looking at
For a firm with a few major products (e.g. pharmaceuticals) – estimate sales for each product –will they grow/decline from last year?
Retail firms – what will be the growth in “same store sales” over last year from existing stores? Are they opening new stores and what will their sales be?
Raw materials producers – need estimate of the output price (e.g. price of nickel, price of oil, etc.). Also need estimate of total output – will the mines start to produce more or less? Will new mines be opened?
Consumer or industrials – What is growth rate in overall product market? Will this company’s market share increase/decrease next year? Combine to estimate revenues.
Statistical techniques – Could use regression to estimate revenues. e.g. regress past sales on some variable thought to be related (maybe regress department store sales on GDP growth). The parameters from the regression, and an estimate of the economic variable for next year will give an estimate of next year’s sales.
Many other factors that you might consider. The point is to think of the company being analyzed as a business – what factors will affect its sales, what do you think will happen with those factors? Is the firm’s strategy going to result in increased or decreased sales? What about state of economy/industry etc.
Estimating revenues should use expertise you have gained in all your courses (marketing/strategy/stats etc.) and a lot of common sense.
Sometimes, your knowledge of the firm will help a lot: are they expanding and planning on large capital expenditures? Are they planning on increasing/decreasing debt load? Are they increasing/decreasing inventory? etc.
Inventory sometimes assumed to be a percentage of sales (but note that often firms are trying to build up inventory, or sell it down)
Investments in cap ex. or working capital must be financed – if the firm has a target debt/asset ratio then this is often used to determine how much of these investments will be finned with debt vs equity (which gives an estimate of debt issuance in the future)
There are other assumptions that you might make in your forecast, the appropriate ones depend on the situation and should be based on your knowledge of the firm and its industry