After getting the idea here, I added an “earnings yield per share” column to my stock holdings spreadsheet, and I was just looking that over.
I decided to sell CMG (Chipotle) because their % was under the 30 year Treasury and I want to simplify my port a little bit.
But then I looked at the heavy EYPS? companies in my port. One of them is… Gilead!
GILD appears to have a beefy 7.16% earnings yield per share. When I look at CELG, it has a modest 2.73% (only slightly over the treasury rate).
I thought that was interesting. Some of the other bigs in my port are Wells Fargo and Apple…
I also think it’s interesting that AMBA’s % is larger than Facebook’s. However FB is much larger than AMBA.
I’m not sure how to interpret the numbers though…
Karen
Karen, What IS earnings yield per share?
Inversion of P/E.
So it is E/P.
Regards,
CMFBLSH
Long Gild, short GiLD puts, long GILD calls
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Wait, haven’t you talked about it before?
The formula I have been using is – EPS / share price – so it fluctuates with share price.
Have I used the wrong terminology here?
Karen
I think that is usually just called “earnings yield”
http://www.investopedia.com/terms/e/earningsyield.asp
This essentially tells you the rate at which the company earns money relative to it’s price. It’s the inverse of P/E ratio which is most commonly used on this board.
another similar variable one could use if they thought earnings were fudged is Free Cash Flow Yield
http://www.investopedia.com/terms/f/freecashflowyield.asp
Gator
The potential cautions on Gilead are:
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they are curing a disease and at some point the number of new patients requiring their main product may decrease
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they are facing increasing competition from other large Pharma companies, and as a result lower pricing may result. PBIs are seeking to achieve price savings in the HEP C area.
That is not to say that GILD is not a good value, but one should be aware that the low p/e of the stock is due to these reasons.
sw
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