1. Differences in a
publicly traded company's year-on-year
earnings or
earnings per share in both positive and negative directions. Earnings variability is sometimes considered a negative sign as
investors do not know whether the company's earnings in one year can be sustained in the next. This can lead to a low
P/E ratio as high earnings in a given year do not equate to an increase in share price. It is the opposite of
earnings momentum.
2. The amount a worker's
wages or
salary change from year to year. Earnings variability can occur due to a job change, among other reasons. Between 2003 and 2007, approximately one in five workers saw their earnings increase by 25% or more and one in five saw them decrease by the same amount.