How this number is made
The price-to-earnings ratio is what you pay for one year of the earnings the company just reported, or expects, depending on which earnings you type. The earnings yield is the same fact upside down, earnings divided by price, which is easier to compare with a bond yield. Neither number says the stock is cheap. A low ratio can be a declining business.
- Say whether the earnings are trailing or expected. The page cannot tell.
- A loss makes the ratio meaningless. The page will say so.
Formula
P/E = price ÷ earnings per share. Earnings yield = earnings ÷ price.
Worked example
With the figures already in the form, price to earnings is 20.0.
Questions
What is a normal P/E?
It depends on the industry and on interest rates. This page does not carry a table of normal.
Why is the yield not the dividend?
Earnings are not cash paid to you. The dividend yield page is the cash.