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Monday, April 25, 2011

Earnings Yield Formula & Example

Definition: Earnings Yield is the ratio of earnings per share (EPS) to the stock market price. It can also be calculated by taking the inverse of the P/E ratio and turning it into a percentage. A high earnings yield indicates the stock is undervalued, and a low earnings yield will indicate the stock is overvalued.

Formula:
Earnings Yield = (Earnings per share / Market price per share) * 100%
Or,

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