What is Diluted EPS?
Diluted Earnings per Share (EPS) is the profit entitled to each stock based on stocks outstanding and dilution effect. The dilution effect accounts for share count increases due to options, warrants, and other dilutive securities. It’s calculated by dividing Net Income by Diluted Weighted Average Shares Outstanding (WASO). Whereas Net Income represents the entire pie of profits that shareholders are entitled to, Diluted EPS represents the portion of the pie entitled to each share.
Diluted EPS is usually reported at the bottom of the Income Statement, after Net Income and Diluted WASO. Companies usually show it next to Basic EPS, which is its sister metric.