Earnings Yield Calculator
Calculate earnings yield as alternative to P/E ratio
About this calculator
The Earnings Yield Calculator computes the earnings per share (EPS) divided by the stock price, expressed as a percentage. This metric serves as the inverse of the price-to-earnings (P/E) ratio and helps investors evaluate stock valuation from a different perspective. Earnings yield is particularly useful for comparing stocks with bonds and other fixed-income investments, as it shows the percentage return based on current earnings relative to the stock price.
How to use
Enter the company's earnings per share (EPS) and current stock price into the calculator. The tool will automatically compute the earnings yield percentage by dividing EPS by stock price and multiplying by 100. Compare this percentage across different stocks or against bond yields to assess relative value.
Frequently asked questions
What is a good earnings yield percentage?
Generally, higher earnings yields indicate better value. A yield above 6-8% may suggest an undervalued stock, while very low yields might indicate overvaluation.
How does earnings yield differ from P/E ratio?
Earnings yield is the inverse of P/E ratio. While P/E shows price per dollar of earnings, earnings yield shows earnings per dollar invested.
Can earnings yield be compared to bond yields?
Yes, earnings yield can be directly compared to bond yields to help investors decide between stocks and fixed-income investments based on current returns.