Earnings Multiplier

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Earnings Multiplier

The price of a security per share at a given time divided by its annual earnings per share, adjusted for current interest rates. Often the earnings used are trailing 12-month earnings, but some analysts use other forms. The earnings multiplier is a way to help determine a security's stock valuation, that is, the fair value of a stock in a perfect market. It is also a measure of expected, but not realized, growth. It is a variation on the price-earnings ratio.
References in periodicals archive ?
The sun will come out tomorrow": Optimistic outlooks for the economy in 2009 should cause earnings multipliers on equities to rise ahead of the anticipated positive developments.