Earnings Yield
factor.formula
Earnings Yield:
The calculation formula of earnings yield. Among them, $E_{TTM}$ represents the net profit attributable to the parent company's shareholders in the last 12 months, also known as the rolling price-earnings ratio, which indicates the company's profit level in the past year; $MV$ represents the company's total market value, which is the sum of the market values of all issued shares.
The formula calculates the ratio of a company's net profit attributable to the parent company in the last 12 months to the company's total market value.
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The net profit attributable to the parent company's shareholders in the last 12 months (Trailing Twelve Months). This value is obtained by accumulating the net profit attributable to the parent company's shareholders in the last four quarters, reflecting the company's actual profitability in the past year. Using TTM data can eliminate the impact of seasonal fluctuations and provide a more accurate and stable profit level assessment.
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Market Value. Market value refers to the total market price of all issued shares, calculated as: current share price multiplied by total share capital. Market value reflects the market's assessment of the company's overall value.
factor.explanation
Earnings yield is a commonly used indicator to measure stock value. It is the inverse of the price-earnings ratio. The higher the earnings yield, the higher the net profit that investors can get for each unit of market value invested, that is, the stronger the company's profitability, the greater the possibility that the stock price is relatively undervalued, and the higher the investment return potential. In quantitative investment, earnings yield is often used as a basis for screening undervalued stocks with investment value. This indicator provides investors with a convenient tool to measure a company's profitability and stock price level, which helps investors identify potential value investment opportunities. Earnings yield is also often used together with other value factors, such as book-to-market ratio, to form a more complete stock selection strategy.