Diluted Normalized Earnings Per Share

AAA

DEFINITION of 'Diluted Normalized Earnings Per Share'

A company's profit less one-time earnings, divided by both outstanding common stock and stock owed if convertible securities were to be exercised. Diluted normalized EPS is different than regular earnings per share (EPS) because it takes into account options, dividing normalized profit by more shares. Diluted normalized EPS is more likely to be lower than regular EPS. The closer it is to regular EPS, the more stable a company's ongoing operations are. The greater the difference, the greater the risk of share dilution and unsustainable ongoing operations. Normalized earnings are earnings that have been adjusted by a company to omit irregular expenses against earnings.

INVESTOPEDIA EXPLAINS 'Diluted Normalized Earnings Per Share'

Investors pay attention to diluted normalized EPS because it gives a clearer picture of the health of a company's ongoing operations. Because it uses normalized earnings, the sale of a division is discounted and can't temporarily inflate profitability. Diluted normalized EPS also pinpoints a company with a large number of convertible securities, as these options can potentially reduce EPS and dividend payouts by increasing the number of shares on the market.

RELATED TERMS
  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Normalized Earnings

    1. Earnings adjusted for cyclical ups and downs in the economy. ...
  3. Diluted Earnings Per Share - Diluted ...

    A performance metric used to gauge the quality of a company's ...
  4. Fully Diluted Shares

    The total number of shares that would be outstanding if all possible ...
  5. Normal Profit

    When economic profit is equal to zero; this occurs when the difference ...
  6. Inherent Risk

    The risk posed by an error or omission in a financial statement ...
Related Articles
  1. The 5 Types Of Earnings Per Share
    Markets

    The 5 Types Of Earnings Per Share

  2. Assess Shareholder Wealth With EPS
    Fundamental Analysis

    Assess Shareholder Wealth With EPS

  3. Getting The Real Earnings
    Options & Futures

    Getting The Real Earnings

  4. Understanding Rights Issues
    Options & Futures

    Understanding Rights Issues

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center