Ask a Fool: What Is Diluted EPS?
In most cases, EPS and diluted EPS will be slightly different, with diluted EPS being the lower of the two figures. And the language can vary slightly among companies. For example, you may read that a company earned $1 per share or $0.94 on a "fully diluted" basis.
Here's the difference: Standard earnings per share (EPS) is based on a company's outstanding shares -- or, more specifically, on its weighted average outstanding shares during the reporting period. In other words, if a company earned $1 million and had 1 million outstanding shares, its EPS would be $1.
On the other hand, diluted EPS is based on the number of shares a company could eventually have outstanding. This not only includes the current outstanding shares but any convertible preferred stock, outstanding stock options, warrants, and other instruments that could result in future common shares being issued.
Source Fool.com
