Adjusted Net Income / (Weighted-Average Shares + Dilutive Potential Shares)
Diluted EPS counts options and convertibles that could become shares.
What it is
Diluted earnings per share is a more conservative version of EPS. It assumes that every security that could become a common share, such as employee stock options, warrants, and convertible bonds, actually does, as long as doing so would lower EPS. This spreads profit across a larger share count, so diluted EPS is always equal to or lower than basic EPS.
Why it matters
It shows the worst-case dilution today's shareholders could face, which matters most for companies that pay people heavily in options. A large gap between basic and diluted EPS is a warning sign that existing owners' stakes are being watered down.
How it's calculated
Adjust net income for the after-tax effect of dilutive convertibles, then divide by the weighted-average shares plus all dilutive potential shares (using the treasury-stock method for options); anti-dilutive securities are excluded.
How Quintarthai uses it
Diluted per-share figures are shown alongside basic EPS on the Ratios tab and in the Financials income statement for each company. Open a company page in the app to compare them.
Cross-border note. Both US GAAP and IFRS require diluted EPS on the income statement, so it is directly comparable between US (EDGAR) and Canadian (SEDAR+) filers.
FAQ
Can diluted EPS ever be higher than basic EPS?
No. By rule, diluted EPS can only equal or fall below basic EPS, because adding potential shares can never increase per-share earnings; anti-dilutive securities are simply excluded.
Which EPS should I use for the P/E ratio?
Diluted EPS is the more conservative and widely cited choice, since it reflects the full potential share count rather than understating dilution.
Check your understanding
Why is a company's diluted EPS always equal to or lower than its basic EPS?
Diluted EPS assumes dilutive options and convertibles become shares, increasing the denominator, so per-share earnings can only stay the same or fall.