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.
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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.
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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.

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References in periodicals archive ?
Dilutive options and warrants are only relevant for computing diluted EPS. Only the average market price would be used, and the modified treasury stock method would be eliminated.
Under the FASB's tentative conclusions, fully diluted EPS would be replaced with diluted EPS.
Diluted EPS grew 35.5% to $1.26 in the third quarter of 2018 compared to diluted EPS of 93c in the third quarter of 2017.
Basic and diluted earnings per share were USD0.53 and USD0.52, respectively, for the fourth quarter of 2015, as compared to basic and diluted EPS of USD0.49 for the fourth quarter of 2014.
NORDIC BUSINESS REPORT-July 20, 2015-Husqvarna's diluted EPS up by 18% in Q2 2015
Technology solutions provider HP (Nasdaq:HPQ) on Monday reported net earnings of USD7.07bn, or diluted EPS of USD3.32, for fiscal 2011.
Companies having dilutive securities outstanding - such as options, warrants, convertible bonds, or convertible stock - must calculate two additional EPS numbers, primary and fully diluted EPS. Primary EPS is simple EPS adjusted to include the effects of common stock equivalents exercisable within five years.
CEO Raymond McDaniel said, "We are reducing our outlook for full year diluted EPS to a range of $6.95 to $7.10 and adjusted diluted EPS to a range of $7.50 to $7.65, primarily reflecting our expectation for continued lighter debt issuance into the fourth quarter.
M2 EQUITYBITES-July 11, 2018-Orexo's diluted EPS up in Q2 2018
Rejlers AB: (STO:REJL), an engineering consultancy firm in the Nordic region, on Monday reported profit after tax of SEK33.9m, or diluted EPS of SEK2.78, for the year 2014, from January 2014 to December 2014.
Net income available to common shareholders was USD15.8m, or USD0.66 diluted earnings per share in the first quarter of 2014, up 20.3 percent compared to USD13.2m, or USD0.55 diluted EPS in the fourth quarter of 2013, and up 48.8 percent from USD10.6m, or USD0.63 diluted EPS in 1Q 2013.
Information technology company IBM (NYSE:IBM) on Tuesday reported diluted GAAP net income of USD2.9bn or GAAP diluted EPS of USD2.31 for the first quarter of 2011, ended 31 March 2011.