Earnings Yield Calculator

About this calculator

Earnings yield flips the familiar price-to-earnings ratio upside down: instead of price divided by earnings, it is earnings per share divided by share price, expressed as a percentage. A stock trading at a P/E of 20 has an earnings yield of 5%, meaning that, in theory, for every dollar invested the company generates five cents of earnings. Because it comes out as a percentage rather than a multiple, it can be compared directly against interest rates on bonds or savings accounts.

Analysts use earnings yield in models like the so-called Fed Model, which compares stock market earnings yield against the yield on long-term government bonds to gauge whether equities look cheap or expensive relative to fixed income. A rising earnings yield relative to bond yields suggests stocks are becoming more attractive on a value basis, while a falling one suggests the opposite. This calculator takes earnings per share and the current share price to compute the earnings yield.