diluted earnings per share

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Diluted Earnings per Share

The earnings per share of a publicly-traded company calculated on the assumption that all convertible securities were exercised. That is, instead of considering only common stock currently in existence, the diluted EPS assumes that all securities such as stock options, convertible bonds, and anything else that can be changed into common stock is actually changed. The diluted EPS is useful for common shareholders because it represents the earnings one would receive in the worst possible situation. Many companies report both the basic EPS and the diluted EPS. The actual EPS usually falls between the two. See also: Dual Presentation.

diluted earnings per share

An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of common stock. Net income is adjusted for any changes that would occur because of the conversions. Diluted earnings per share is a particularly effective method of presenting earnings-per-share data for companies with complex capital structures. Compare basic earnings per share. See also dual presentation.

Diluted earnings per share.

In addition to reporting earnings per share, corporations must report diluted earnings per share. This accounts for the possiblity that all outstanding warrants and stock options are exercised, and all convertible bonds and preferred shares are exchanged for common stock.

Diluted earnings actually report the smallest potential earnings per common share that a company could have based on its current earnings. In theory, at least, knowing the diluted earnings could influence how much you would be willing to pay for the stock.

References in periodicals archive ?
Reconciliations of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS
15 diluted EPS, for the quarter ended September 30, 2013.
However, the FASB staff has resolved the problem in Topic 62 of the EITF Abstracts: The calculation of diluted EPS for the year-to-date period should include dilutive potential common shares for all quarters on a quarterly weighted-average basis.
Opinion 15 required that entities with a complex capital structure present a dual presentation of both primary and fully diluted EPS on the face of the income statement.
The new standard, which is applicable to financial statements for periods that ended after December 15, 1997, requires that companies report Basic EPS and Diluted EPS.
Altria is redefining adjusted diluted EPS to also exclude charges for tobacco and health judgments
Non-GAAP diluted EPS for the third quarter of 2014 increased 23% to $0.
55 diluted EPS in the fourth quarter of 2013, and up 48.
Any company with potential common shares has a complex capital structure and must disclose both basic and diluted EPS.
Companies with a simple capital structure present BASIC EPS while those with a complex capital structure present primary and fully diluted EPS.
Raising 2014 revenue guidance to $455-$465 million and non-GAAP diluted EPS guidance to $2.
11 fully diluted EPS in the fourth quarter of 2010.