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Wednesday, July 15, 2009
Selena Maranjian :: Townhall.com Columnist
The Magic of the Earnings Yield
by Selena Maranjian
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Poll
Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


Here's a measure few people know about that can shed some light on your investing process: the earnings yield. It's actually the inverse of the price-to-earnings (P/E) ratio. The P/E is a stock's current price divided by its earnings per share (EPS) over the past or upcoming year. To get the earnings yield, you just flip those, dividing EPS by the stock price.

Here -- check out some examples, all of which have earned 4- or 5-star ratings (out of five) from our Motley Fool CAPS community:

Company

Recent Stock Price

Trailing 12-Month EPS

P/E Ratio

Earnings Yield

Agrium (NYSE: AGU)

$37.14

$6.73

5.5

18.1%

Cardinal Health (NYSE: CAH)

$29.89

$3.32

9.0

11.1%

Viacom (NYSE: VIA-B)

$20.99

$1.88

11.2

9%

3M (NYSE: MMM)

$60.63

$4.26

14.2

7%

PepsiCo (NYSE: PEP)

$56.09 Continued...
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About The Author

Selena Maranjian prepares the Fool's syndicated newspaper column, writes articles for Fool.com, has coordinated the Fool's annual Foolanthropy charity drive, and has written a number of Fool books, among other things.

Be the first to read Selena Maranjian's column. Sign up today and receive Townhall.com delivered each morning to your inbox.

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