Angie · learn
Earnings yield
Earnings for every dollar invested, which makes a stock directly comparable to a bond yield. A company losing money has none.
How it is calculated
Earnings yield = 1 ÷ trailing P/E
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Trailing P/E — What the market pays today for each dollar the company earned last year.
- EPS — Profit for the last twelve months divided by the share count. Accounting profit, not cash, which is why Angie values the cash instead.
- Risk-free rate — The 10-year Treasury yield, standing in for the return available with essentially no risk. Every other rate in the model is built on top of it.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
