what is diluted eps 
diluted eps is a measurement used to gauge the quality of a company s earnings per share eps if all convertible securities were exercised the diluted eps is commonly lower than the simple or basic eps convertible securities are outstanding convertible preferred shares convertible debentures stock options and warrants investopedia michela buttignolunderstanding diluted epsearnings per share or eps is a financial metric used to measure a company s profitability it compares the company s net earnings against its current number of shares calculating diluted eps includes shares that a company may be obligated to issue in the future convertible preferred stock stock options and convertible bonds are common types of dilutive securities all of these securities if exercised would increase the number of shares outstanding and decrease eps convertible preferred stock is a preferred share that can be converted to a common share at any time stock options grant the buyer the right to purchase common stock at a set price at a set time convertible bonds are similar to convertible preferred stock as they are converted to common shares at the prices and times specified in their contracts shareholders typically resist dilution as it devalues their existing equity stake and reduces a firm s earnings per share 