Earnings Per Share

9 Months Ended

Sep. 30, 2020

11. Earnings Per Share

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series A Preferred Stock is considered participating securities because it has dividend rights determined on an as-converted basis in the event of Company’s declaration of a dividend or distribution for common shares.

The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
Computation of earnings per share	2020		2019		2020		2019
Net income (loss) attributable to Mr. Cooper	$	209	$	84	$	114	$	(189)
Less: Undistributed earnings attributable to participating stockholders	2		1		1		—
Net income (loss) attributable to common stockholders	$	207	$	83	$	113	$	(189)

Net income (loss) per common share attributable to Mr. Cooper:
Basic	$	2.26	$	0.91	$	1.23	$	(2.08)
Diluted	$	2.18	$	0.90	$	1.20	$	(2.08)

Weighted average shares of common stock outstanding (in thousands):
Basic	91,682		91,080		91,688		91,012
Dilutive effect of stock awards(1)	2,563		117		1,529		—
Dilutive effect of participating securities(1)	839		839		839		—
Diluted	95,084		92,036		94,056		91,012

(1)For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive.