Earnings Multiplier

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 method of valuation, used in this case and predominantly in acquisitions, is an earnings multiplier.
The valuation methodology used by Denshi and IDS in their negotiation is the earnings multiplier approach.
The estimated income of individuals working in the Memphis music industry shown in column (1) was multiplied by the earnings multiplier in column (3), resulting in the estimated total impact on regional earnings in column (5).
The estimated income of local musicians who play at Tunica casinos shown in column (1) was multiplied by the earnings multiplier in column (3), resulting in the estimated total impact on regional earnings in column (5).
The Guaranteed Earnings Multiplier is intended to offset tax on the annuity's death benefit.
The purchase of a financial insurance product may increase the volatility of earnings per share and decrease the earnings multiplier.
Since funding for the loss contingency with financial insurance increases the cash requirements of the firm, an increased cash requirement financed by debt will result in an increase in the volatility of earnings per share and a reduction in the earnings multiplier.
The Denshi acquisitions team, under Kenji's direction, applied the earnings multiplier approach to valuing IDS, using the IDS 2008 net profit of 33.
Using an earnings multiplier of seven, Yolanda placed the value of IDS at 236.
The Manufacturers Life Insurance Company of North America (Manulife North America), the annuity division of Manulife Financial Corporation (NYSE: MFC), announced today the introduction of two new riders for the Venture(R) Annuity - the Guaranteed Retirement Income Program II (GRIP II) and the Guaranteed Earnings Multiplier.
The Manufacturers Life Insurance Company of North America (Manulife North America), the annuity division of Manulife Financial Corporation (NYSE: MFC) announced today the introduction of the Guaranteed Retirement Income Program II (GRIP II(SM)) and the Guaranteed Earnings Multiplier, two new optional riders on Venture Vantage(R), its payment enhancement annuity.
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.