When valuing a company using earnings, can we add back stock-based compensation if we use fully diluted shares?

For example, adjusting earnings for stock-based compensation and then projecting the earnings into the future and then dividing the present value of that by fully diluted shares instead of basic outstanding shares?

With the reasoning being that fully diluted shares would be all the shares if the stock-based compensation were exercised and that we are adjusting the earnings since it is not a cash-based expense, but rather something that dilutes equity ownership?

Or am I understanding stock-based compensation wrong?