No dilution
What it measures¶
A company is divided into shares; each owner has a slice in proportion to the shares they own. When the company issues new shares — to raise money, to pay staff in shares, or to pay for an acquisition — each existing share becomes a smaller slice. This is dilution. The check compares the number of shares at the latest year-end with the year before and asks: did it stay level or fall?
The stored statements carry no separate line for shares issued, so the check reads the year-end share count; a share split (one share becoming two, say) is adjusted for before the comparison.
Why it is on the page¶
Joseph Piotroski's checklist, Patricia Dechow's misstatement model and the "Quality minus junk" study all count new share issuance against a company, and in Dechow's model it is the single largest contributor. A company that needs fresh money from its owners each year is not funding itself from its own business; one that pays staff heavily in shares shifts part of their cost onto existing owners.
Thresholds, their source and the population they were fitted on¶
| Result | When |
|---|---|
| ✓ passed | the share count did not rise during the year (change 0 or less) |
| ✕ failed | it rose |
| ○ not evaluable | the share count of either year-end is not stored |
- Source: Piotroski (2000), his seventh check (
EQ_OFFER); Dechow, Ge, Larson and Sloan (2011); Asness, Frazzini and Pedersen, "Quality minus junk". - Fitted on: US companies priced low against the equity on their balance sheet, 1976–1996 (Piotroski); US enforcement actions, 1982–2005 (Dechow); listed companies in 24 countries (Asness and colleagues).
- Evidence grade: peer-reviewed and replicated.
- Basis: absolute.
A worked example¶
Honeywell International, fiscal year 2025 (statements stored on 25 October 2026): the share count fell by 2.2%, the result of shares bought back — passed.
Meta Platforms, the same year: no share count is stored for fiscal 2025, so the check read not evaluable — shares outstanding FY2025.
What “No verdict” means here¶
The check is not evaluable when the share count of the latest or the previous year-end is not stored; the missing input is named and the check leaves the area's count. It is never assumed that the count did not change.
What the verdict is and is not¶
A pass says the number of shares did not grow in the year. A company can issue shares for a good reason — to acquire a business worth more than the shares — and still fail this check. It is not a forecast and not an instruction to trade the shares.