earnings-price ratio

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Earnings-price ratio

Earnings-Price Ratio

The annual earnings of a security per share at a given time divided into its price per share. It is the inverse of the more common price-earnings ratio. Often, the earnings one uses are trailing 12-month earnings, but some analysts use other forms. The earnings-price ratio 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 may be used in place of the price-earnings ratio if, say, there are no earnings (as one cannot divide by zero). It is also called the earnings yield or the earnings capitalization ratio.

earnings-price ratio (E/P ratio)

A measure indicating the rate at which investors will capitalize a firm's expected earnings in the coming period. This ratio is calculated by dividing the projected earnings per share by the current market price of the stock. A relatively low E/P ratio anticipates higher-than-average growth in earnings. Earnings-price ratio is the inverse of the price-earnings ratio. Also called earnings capitalization rate, earnings yield.
References in periodicals archive ?
In any event, earnings growth, P/E ratios, dividend yields and earnings yields all signal catch-up potential for the Vienna Stock Exchange.
COL shrugged off concerns that local equities were expensive, noting that potential earnings yields were not so expensive, taking into account fixed income yields.
Bond-equity earnings yields ratios are, with the exception of the post Lehman phase, historically low.
First, low short interest rates and bond yields have encouraged cheap borrowing and enabled private equity specialists to leverage themselves up and to purchase companies on valuations that exploit the difference between money market yields and earnings yields.
investors require much higher earnings yields (relative to the benchmark ten-year Treasury yield) than before.
In Table 3a, the vector-error-correction model involving the earnings yields (E_P), the inverse of the price-earnings ratio, and inflation (PDOT) is shown.
This study examines whether earnings yields and inflation premiums are incorporated into long-term stock returns using the data set provided by Renshaw [1997].
To summarize, the Rolph-Shen study shows that, over the past 30 years, a very low spread between earnings yields and short-term interest rates has generally signaled poor stock market performance during the subsequent month.
Normally, equity earnings yields trade below their bond yield counterparts as investors are willing to accept lower yields for the positive optionality of owning equity.
Earnings yields attractive relative to Treasury and corporate bond yields
Earnings yields are attractive relative to Treasury and corporate bond yields