What is Earnings Yield using PE Ratio ?
Earnings Yield, derived from the Price-Earnings (PE) Ratio, is a key metric used by investors to gauge the attractiveness of a stock's valuation. It is calculated by taking the inverse of the PE ratio, or dividing the earnings per share (EPS) by the market price per share. A higher earnings yield signifies that the stock is generating more earnings relative to its price, suggesting potential undervaluation. Conversely, a lower earnings yield may indicate overvaluation. Investors often compare earnings yields across different stocks or industries to identify investment opportunities with favorable earnings potential relative to their market prices.
How to Calculate Earnings Yield using PE Ratio?
Earnings Yield using PE Ratio calculator uses Earnings Yield = (1/Price-Earnings (PE) Ratio)*100 to calculate the Earnings Yield, The Earnings Yield using PE Ratio is the reciprocal of the PE ratio, calculated by dividing 1 by the PE ratio or EPS by the market price per share, indicating the percentage of earnings generated relative to the stock's market value. Earnings Yield is denoted by EY symbol.
How to calculate Earnings Yield using PE Ratio using this online calculator? To use this online calculator for Earnings Yield using PE Ratio, enter Price-Earnings (PE) Ratio (PE) and hit the calculate button. Here is how the Earnings Yield using PE Ratio calculation can be explained with given input values -> 40 = (1/25)*100.