Normally, a ratio of bond yield to earnings yield of 1.0 is considered cheap.
The Dow must rise to 36, 000 to reach a reasonable earnings yield, under very cautious assumptions.
In order to calculate an earnings yield premium you must first calculate an earnings yield.
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Its earnings yield is over 100% and its return on capital is over 60%.
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Keep renting (or, if you own, sell) if the earnings yield is lower than 3%.
White Mountains has a negative rate of return of 1.97% and earnings yield of 11%.
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Relative to Treasuries, the earnings yield (earnings per share divided by the share price) favors stocks.
The two things I look at are earnings yield, which is how cheap is the company.
Second, though earnings yield makes bonds appears expensive to stocks, the comparison does not automatically make stocks cheap.
With 10-year Treasury bills inching above 3.5%, a good earnings yield generally is considered somewhere north of 5.5%.
As a measure of valuation, Segarra uses the operating earnings yield (the inverse of the price-operating earnings ratio).
Shares trade at a 6.3% earnings yield versus 4.5% on German ten-year debt.
By "yield" here I mean the earnings yield, or earnings divided by price.
So you rank all companies, thousands of companies based on how cheap they are based on their earnings yield.
My Greenblatt-based model likes its 30.6% earnings yield and 63.7% return on capital.
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Chevron is also near the top of oil majors in earnings yield.
Because the earnings yield is a rate of return, it can be directly compared with other rates of return.
The dividend or earnings yield, for example, can be compared with bond yields.
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It gets a perfect score on valuation, however, in part because of a big earnings yield and strong free cash flow.
On the first count, the earnings yield for Amedisys is 15.45%, making it No. 83 of all stocks in the Validea database.
So study charts of earnings yield (earnings per share divided by stock price) versus dividend yield (dividends divided by stock price).
One tool for putting valuations into perspective is the market's earnings yield.
When all is said and done, however, the amateur investor is well advised to look hard, and think hard, about earnings yield.
In my Greenblatt model, I calculate return on capital and earnings yield in the same ways that Greenblatt lays out in his book.
The earnings yield of 7.4% also favors stocks, especially when compared to the extraordinarily low yield of 1.43% for the 10-year Treasury note.
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This translates to an earnings yield of 5.56% to 5.71%, higher (but no longer wildly so) than the U.S. 10-Year Treasury yield of 5.14%.
In combination with a 2% dividend yield, this stock offers a substantial 9% earnings yield that compares well with current bond returns.
Proponents of earnings yield say it enables a comparison against bonds, with higher comparative yields suggesting one investment vehicle is cheaper than the other.
According to Segarra, Oshkosh has an operating earnings yield of 6% and ranks above 71% of the other companies in the Ford universe of stocks.
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