"diluted earnings per share" is the more trustworthy unit of knowing the worth of a stock. The diluted as the term suggests is the earnings per share calculated on today's net profit divided by the number of shares if all convertible securities are converted into equity shares on a future date.

That is if the stock has reported a net profit of 20 millions this fiscal and has issued 5 million shares, then Earnings per share stand at 4. Now if comny has issued 1 million fully convertible debentures at a specified price on a future date which will be coverted to another 5 million shares then "diluted earnings per share' will stand at 2 per share.

This is just an indication but the effect of equity dilution may be overcome by increase in revenues, reduction in interest paid on these debentures etc.