What is yield? Earnings Yield

Yield, also known as Earnings Yield in English, is a financial analysis indicator that measures the profit earned by a company per unit of stock price. Yield is calculated by dividing a company's earnings per share, or EPS TTM, over the trailing 12 months by the current share price to calculate how much the company earns per dollar of stock. For example, when a company earns a yield of 8%, it means it earns $0.08 in profit for every $1 of share price. In practical applications, the rate of return is usually used to measure whether a stock is overvalued or undervalued. A lower rate of return indicates that the stock price may be overvalued, while an excessive rate of return indicates that the stock price may be undervalued. It can be seen from the calculation formula that the rate of return is numerically equal to the reciprocal of the price-to-earnings ratio (P/E Ratio). Because the price-to-earnings ratio is calculated by dividing the stock price per share by the earnings per share, the meaning of the two indicators is exactly the opposite. The rate of return represents the amount of profit an investor can earn from a unit of stock price, and the P/E ratio represents the amount of money an investor needs to invest in a stock to obtain a profit per unit.