EPS quite simply is the earning per share, an example; say the earning of a company is $100,000. It has currently got 10000 shares issued in the market. So the EPS comes out to be $10 per share. This means that for every share that the shareholder owns the he earns $10.(it does not mean that this will be paid out as dividends)
Diluted EPS is the earnings per share of a company after taking into account the number of shares that are locked in stock options. This measure takes into account the number of shares that are with the holder of stock options and dilutes the EPS.
However if the company has issued 10000 shares as ESOP, which, are currently, in the Lock in Period the number of shares for the calculation of EPS would increase to 20000 and the Diluted EPS would be $5.
