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I know EPS is earnings per share, but what is the "diluted" referring to?

Thanks.
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Greetings licker,

I know EPS is earnings per share, but what is the "diluted" referring to?

From www.investorwords.com :
"Earnings per share, including common stock, preferred stock, unexercised stock options, unexercised warrants, and some convertible debt. In companies with a large amount of convertibles, warrants and stock options, diluted earnings per share are usually a more accurate measure of the company's real earning power than earnings per share. "

Does that help or do you need more elaboration?

Regards,
JB
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Thanks, that helps, though I don't really know what warrants and convertibles are.

Does plain EPS just include common stock then?
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Greetings,

Thanks, that helps, though I don't really know what warrants and convertibles are.

Both definitions from www.investorwords.com :

Warrant -> A certificate, usually issued along with a bond or preferred stock, entitling the holder to buy a specific amount of securities at a specific price, usually above the current market price at the time of issuance, for an extended period, anywhere from a few years to forever. In the case that the price of the security rises to above that of the warrant's exercise price, then the investor can buy the security at the warrant's exercise price and resell it for a profit. Otherwise, the warrant will simply expire or remain unused. Warrants are listed on options exchanges and trade independently of the security with which it was issued.

Convertible debt -> Security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.

Does plain EPS just include common stock then?

Yes, just the common stock. Total earnings divided by the number of shares outstanding is the standard definition of EPS.

Does that help?

Regards,
JB
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Yes, that clears it up.

Thanks a lot.
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