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Earnings Yield Definition
Description
A financial metric that compares the earnings per share of a company to its share price, effectively showing how much a company earns per dollar of investment. It is the inverse of the price-to-earnings (P/E) ratio.
It is calculated using the formula:
Earnings Yield = (EPS / Share Price)*100
A higher earnings yield indicates that a company is generating substantial earnings relative to its share price, suggesting a potentially undervalued stock or a good return on investment. Conversely, a lower earnings yield might suggest overvaluation. This measure helps investors assess the profitability of their investment relative to the market price of the stock.

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