Definition

Earnings yield is the percentage a company made per share on an annual basis.The earninings yields is calcualted by taking the earning per share (EPS) and dividing it by the current market price.

Calculation

Earnings Yield = EPS/Price

Why is earnings yield important?

The earnings yield can assist investors in comparing potential returns between two equities. Growth stocks will generally have a lower earnings yield, and value stocks tend to have much higher earnings yields.