Definition of 'Earnings Yield'
Earnings yield is often used as a valuation metric for stocks. It is one of the most important factors to consider when comparing stocks, as it can help you determine whether a stock is a good investment.
There are a few things to keep in mind when using earnings yield to evaluate stocks. First, earnings yield is a forward-looking metric. It is based on the company's expected earnings per share, which are not guaranteed. Second, earnings yield is not adjusted for risk. A stock with a high earnings yield may be riskier than a stock with a lower earnings yield.
Overall, earnings yield is a useful metric for evaluating stocks. However, it should be used in conjunction with other metrics, such as price-to-earnings ratio (P/E ratio), to get a more complete picture of a stock's value.
Here are some additional points about earnings yield:
* Earnings yield is also known as the dividend yield on equity.
* The earnings yield is the inverse of the price-to-earnings ratio (P/E ratio).
* A stock with a high earnings yield is often considered to be a good investment, as it is more likely to pay a high dividend.
* However, a stock with a high earnings yield may also be more volatile than a stock with a lower earnings yield.
* Earnings yield is a useful metric for comparing stocks within the same industry.
* It is also a useful metric for comparing stocks to the overall market.
Earnings yield is a valuable tool for investors, but it should be used in conjunction with other metrics to get a complete picture of a stock's value.
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