This figure, diluted EPS, is calculated by dividing net income net of preferred dividends by a weighted average of total shares outstanding plus additional common shares that would have been outstanding if the dilutive common share would have been issued for the trailing 12 months.
Benefit
This figure gives a more accurate picture of a company’s recent performance than the most recent annual EPS figure, which may be more than a year old.
Origin
This is found at the bottom of the company’s income statement.
For the Pros
Earnings per share is the portion of a company's profit allocated to each outstanding share. As of January 1998, all EPS numbers collected by Morningstar are Diluted EPS (as per FASB 128). Diluted EPS is calculated by dividing net income (plus convertible-preferred dividends and after-tax amount of interest recognized in the period, associated with any convertible debt) by the sum of the weighted-average shares outstanding, and any additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In the past, Morningstar has used Primary EPS on a consistent basis.