Diluted EPS

Diluted EPS means earnings per share calculated as if all possible shares were issued. In simple terms, diluted EPS shows profit per share after considering potential dilution. Diluted EPS is important because stock options, convertible bonds, or other securities can increase the number of shares in the future. Investors use diluted EPS to get a more conservative view of profit per share. For example, if employee stock options could add more shares, diluted EPS will include that effect. Diluted EPS is not the same as basic EPS. Basic EPS uses current shares, while diluted EPS includes potential additional shares.