Earnings yield
Earnings per share divided by the share price, the inverse of the P/E ratio, expressing profit as a percentage of the price.
A P/E of 20 is an earnings yield of 5%. Earnings yield makes shares easier to compare with bonds, but unlike interest, a company's earnings can grow, shrink or disappear, and they are not all paid out.
Learn more in these lessons
- The P/E ratioWhat does a P/E ratio tell you about a share?
- Earnings, dividend and free cash flow yieldsHow do yields help you compare shares with each other and with bonds?
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