Sentences with phrase «earnings yields»

P / E ratios may be the established standard for valuation purposes, but earnings yields are especially useful for comparing potential returns across different instruments.

[Years 1921 and 1922 are consistent outliers, showing saturation, with exceedingly high earnings yields.

Intuitively, stocks with low P / E ratios have high earnings yields, which may be indicative of a bargain (especially if the stock has been battered down by bad news, but nothing has changed fundamentally for the company or the industry).

None of the normalized changes in percentage earnings yields delta 100Ex / P resulted in an R - squared level as high as 0.10.

Earnings yields figure prominently in the so - called Fed model, which was popular in the late 1990s.

However, in pessimistic periods when price - to - earnings multiples compress, there is an overwhelming advantage to being invested in the least - expensive companies (e.g., those with the highest earnings yields).

The graph shows that higher levels of inflation often coincide with higher levels of positive correlation between the changes in bond yields and earnings yields.

For a large part of the historical data, bond yields and earnings yields tended to move more closely together.

The graph below shows the 36 - month rolling correlation between the changes in bond yields and earnings yields.

Generally, when inflation is falling bond and earnings yields also decline.

The graph below compares the year - over-year change in the CPI with the correlation of the changes in bond yields and earnings yields.

Not surprisingly, both charts show that when inflation is climbing both bond yields and earnings yields tend to be pressured higher.

On average earnings yields are 32 basis points over bond yields.

Earnings yields are higher than bond yields, particularly among many investment grade companies, fostering buybacks and occasional LBOs.

Using the five - year Treasury as and the S&P 500 my proxies, bond yields have exceeded earnings yields by as much as 8 % in the mid -»50s, while earnings yields have exceeded bond yields by more than 4 % in 1981, 1984 and 1987.

Asset Allocation — best done with forward looking estimates of earnings yields (another case of if everyone did this, it wouldn't work..

His Magic Formula Investing filters on high earnings yields and also high return on capital.

Number three, ideally, all models would not use trailing earnings yields, but expected earnings yields.

The relationship between bond and stock earnings yields is a tenuous one operating over the long haul and on average.

They (roughly) fit a straight - line at lower percentage earnings yields.

Earnings yields in other countries.

It turns out that the initial earnings yields have mattered.

What investors may not realize is that the correlation between interest rates and earnings yields (as well as dividend yields) has also been negative since late - 1990's.

First, the «returns on equities» here are typically taken to be earnings yields, which as we've frequently noted, are affected by cyclical variations in profit margins that make them notoriously poor indicators of long - term prospective returns (see Two Point Three Sigmas Above the Norm and Margins, Multiples and the Iron Law of Valuation).

Specifically, the «Fed Model» — the notion that equity earnings yields and 10 - year Treasury yields should move in tandem — is an artifact restricted to the period between 1980 and 1997, when both equity and bond yields fell in virtually one - for - one lock - step — bond yields because of disinflation, and equity yields because of what was actually a move from extreme secular undervaluation to extreme secular overvaluation.

Stock prices might be falling (earnings yields rising).

If we lived in a world where treasury bonds yielded 10 % and most blue - chip stocks had 2 % dividend yields and 4 % earnings yields, I'd shut the heck up about dividend stocks and start writing about the exhilarating world of fixed income that gets everyone's juices flowin».

For example, earnings yields on stocks were just 3.4 % in March 2000.

Although decades of history have conclusively proved it is more profitable to be an owner of corporate America (viz., stocks), rather than a lender to it (viz., bonds), there are times when equities are unattractive compared to other asset classes (think late - 1999 when stock prices had risen so high the earnings yields were almost non-existent) or they do not fit with the particular goals or needs of the portfolio owner.

The opportunity cost of waiting around for years for prices to fall is an expensive one, particularly when cash yields are far below available earnings yields.

To calculate today's earnings yield, and hence the cost of capital, we'll use the «cyclically adjusted price - to - earnings» ratio, or CAPE, developed by Yale economist Robert Shiller.

The long - term dividend yield is thus 1.5 % (or half of the 3 % earnings yield, or cost of capital).

At a steady P / E, the earnings yield more or less equals the cost of capital.

That puts the earnings yield, the inverse of the CAPE, at almost exactly 3 %.

Looking at the forward earnings yield for S&P 500 stocks, BAML finds dispersion is the highest since 2009, when the market was just starting to recover from the financial crisis.

The earnings yield is the inverse, and mirror image, of the P / E ratio.

At those prices, the real earnings yield, and the cost of capital, would jump to around 6 % (or 8 % including expected inflation).

The gap between the earnings yield on the S&P and Baa corporate bonds is over two standard deviations in favour of stocks.

The analysis used to calibrate next year's index view involves nine different methods, including a normalized earnings yield gap approach, the P / E Bulls - Eye, currency measures, and consumer confidence, which supports a 1,900 year - end result for the S&P 500 - 4 % above the previously released June 2014 expectation of 1,825.

If it just keeps paying out all of its earnings, shareholders will get a return equal to the earnings yield (inverse of the PE) of 6 % plus inflation, or a decent total of around 8 %.

This is especially useful because, if you invert the p / e ratio by taking it divided by 1, you can calculate a stock's earnings yield.

There is no doubt that, based on pure, cold, logical data, stocks are the single best long - term performing asset class for disciplined investors who are not swayed by emotion, focus on earnings and dividends, and never pay too much for a stock, often as measured on a conservative beginning earnings yield relative to the Treasury bond yield basis.

We do this using valuation metrics such as the Price - to - Earnings Ratio, Price - to - Book Ratio, or Earnings Yield.

Third, academic research has found that valuation metrics, such as the earnings yield (E / P) or the CAPE 10 earnings yield, and valuation spreads have predictive value in terms of future returns.

The earnings yield on enormous blue - chip stocks such as Wal - Mart, which had little chance to grow at historical rates due to sheer size, was a paltry 2.54 % compared to the 5.49 % you could get holding long - term Treasury bonds.

A few days ago, I mentioned the a so - called «valuation» indicator derived by comparing the earnings yield on the S&P 500 (based on projected future earnings) with the 10 - year Treasury note.

One popular «valuation» model compares the earnings yield on stocks with the 10 - year Treasury note.

So in order to generate a 10 % long - term rate of return from 6 % earnings growth, you need another 4 % as income, which requires the earnings yield to be about 6.67 % (since 4 % is 60 % of 6.67).

A 6.67 % earnings yield is simply a P / E ratio of 15.

Earnings Yield Earnings per share divided by share price.