Earnings Yield

Definition

Earnings yield is the percentage an investor could expect a company to make per share on an annual basis. The earnings yields is calculated by taking the earning per share (EPS) and dividing it by the current market price.

Calculation

Earnings Yield = EPS/Current Price

Let's say Company A has an earnings per share of $5 and a current price of $25.

$5/$25 = 20% earnings yield

With this example, an investment in Company A could yield 20% per share for the year.

Why is earnings yield important?

The earnings yield can assist investors in comparing potential returns between two equities. Growth stocks will generally have a lower earnings yield, and value stocks tend to have much higher earnings yields.

Financial Glossary Reference

logo-white
Help CenterCOVID-19 TrackerChrome ExtensionChart BuilderFeaturesBlogStock Rating SystemResearch DisclosurePrivacy PolicyFinancial GlossaryTerms of UseDisclaimersCookie Policy

Made in Chicago, IL.

© EEON, Inc. - All Rights Reserved.