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 ?
Using the methodology suggested by Kothari, Sloan (1992), the degree of the relationship between price relatives (one plus the buy-and-hold return) and earnings-to-price ratio (earnings yield) is tested using a quarterly, yearly and intertemporal sample.
it-[tau]] represents the earnings-to-price ratio (earnings yield).
As for the first model, empirical evidence from cross-sectional regression analysis suggest that information provided by earnings-to-price ratios is of some value relevance for explaining market price returns in ASE, i.
The relationship between contemporaneous earnings-to-price ratios and price relatives is not statistically significant.
Basu (1977) shows that high earnings-to-price ratio firms on average earn higher returns than low earnings-to-price firms.
The characteristics of the SEOs that are matched by the characteristic-matched benchmarks are firm size, market-to-book ratio, earnings-to-price ratio, lagged six-month return, and lagged 36-month return.
5% of the market-to-book and earnings-to-price ratios prior to computation of the averages reported in this table.
My results are not sensitive to benchmarks that match on additional characteristics such as earnings-to-price ratios and past returns.
The matched stocks are ten stocks that have the closest earnings-to-price ratios, previous six-month returns and previous 36-month returns, respectively.
The SEO sample also has higher earnings-to-price ratios.
The next benchmark matches on size and earnings-to-price ratios.
This paper uses earnings-to-price ratios as the market's implicit forecast of future earnings changes.