How does this calculator compute earnings yield from price and EPS?

The calculator divides earnings per share (EPS) by the current share price and expresses the result as a percentage: [math]text{Earnings Yield} = frac{text{EPS}}{text{Price per Share}} times 100[/math]. This is the standard E/P definition used in professional valuation work.

How do I use the “From P/E” method and what is the implied P/E shown in the results?

When you enter a P/E ratio, the tool inverts it to get earnings yield: [math]text{Earnings Yield} = frac{1}{text{P/E}} times 100[/math]. The “Implied P/E” row simply shows the reciprocal of the earnings yield you’ve just calculated, so you can flip between the two views of valuation.

What is considered a “good” earnings yield?

There’s no universal cutoff, but investors usually prefer higher earnings yields because they indicate more earnings per dollar invested. In practice, they compare a stock’s earnings yield against sector peers and against broad equity or index earnings yields to judge whether it looks cheap or expensive.

How can I use earnings yield alongside bond or risk-free yields?

Many investors line up a stock or index earnings yield against government or corporate bond yields to see whether they’re being paid enough extra return for equity risk. If the earnings yield is only slightly above, or even below, bond yields, equities may look less attractive relative to fixed income.

Earnings Yield Calculator – Convert P/E to Earnings Yield & Spot Cheap Stocks

Earnings Yield Calculator

Calculate earnings yield (E/P) as a percentage and see the implied P/E ratio. Use either Price and EPS or a P/E ratio input, with presets and a short "What It Means" section for quick interpretation.

Method

Provide Price per Share and Earnings per Share (EPS).

Price per Share

Earnings per Share (EPS)

P/E Ratio

Results

Earnings Yield %
Implied P/E Ratio
Category
Category Key

What is earnings yield?

Earnings yield measures the income a company generates per share relative to its current share price.

It tells you the percentage “return” embedded in the current price, making it easy to compare equities with bond yields, the risk-free rate, and alternative investments.

In equity analysis, earnings yield is the inverse of the P/E ratio and is often used in value investing screens, asset-allocation decisions, and top-down market valuation work.

Analysts cross-check it with metrics like ROIC, free cash flow yield, dividend yield, and WACC to judge whether the price paid today is supported by the firm’s underlying earning power.

Formula

Example

Assume a stock trades at $100 per share and generated trailing-twelve-month EPS of $5.

Earnings yield is:

The implied P/E ratio is:

A 5% earnings yield can then be compared with the 10-year government bond yield, sector median earnings yield, and your required equity return; if bonds yield 4% and the sector screens at 7–8%, this stock would look like a premium-valued name that must justify its price with superior growth, ROIC, and balance-sheet strength.

How to Use the Earnings Yield Calculator

Use this calculator to convert price and EPS or a P/E ratio into an earnings yield and implied P/E, then quickly see whether the yield looks low, moderate, or high.

Choose your input method
- At the top, pick “Price & EPS” if you know the stock price and EPS, or “From P/E” if you only have the P/E ratio.
Enter the required inputs
- - For Price & EPS, type the current Price per Share and Earnings per Share (EPS) values.
- For From P/E, type the company’s P/E Ratio (e.g., 15).
Review earnings yield and implied P/E
- - The Results panel shows the calculated Earnings Yield and Implied P/E Ratio.
- From price and EPS, the core calculation is:
- From P/E, the shortcut is:
Interpret the category band
- Check the Category and Category Key rows to see whether the yield falls into a low, moderate, or higher range, then read the “What It Means” explanation to understand the valuation implication.
Refine, compare, or reset
- - Use Scenarios (if available) or tweak the inputs to test different EPS, price, or P/E assumptions.
- Hit Reset to clear the fields and start a new company or scenario.

Frequently Asked Questions

The calculator divides earnings per share (EPS) by the current share price and expresses the result as a percentage: . This is the standard E/P definition used in professional valuation work.
When you enter a P/E ratio, the tool inverts it to get earnings yield: . The “Implied P/E” row simply shows the reciprocal of the earnings yield you’ve just calculated, so you can flip between the two views of valuation.
There’s no universal cutoff, but investors usually prefer higher earnings yields because they indicate more earnings per dollar invested. In practice, they compare a stock’s earnings yield against sector peers and against broad equity or index earnings yields to judge whether it looks cheap or expensive.
Many investors line up a stock or index earnings yield against government or corporate bond yields to see whether they’re being paid enough extra return for equity risk. If the earnings yield is only slightly above, or even below, bond yields, equities may look less attractive relative to fixed income.

Methodology & Sources

Bibliography

Campbell R. Harvey (2005). Earnings Yield (FY1) — Duke University https://people.duke.edu/~charvey/Teaching/BA453_2005/CC/website/ey_fy1.html
Accessed 2025-12-08
Stephen H. Penman (2008). Book-to-Price and the Risk and Return to Buying Earnings — Columbia Business School, Columbia University https://business.columbia.edu/sites/default/files-efs/pubfiles/3780/penman_returns.pdf
Accessed 2025-12-08
Aswath Damodaran (2025). S&P Earnings History – Earnings Yield, Dividend Yield and Buybacks — NYU Stern School of Business https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.html
Accessed 2025-12-08

Earnings Yield Calculator

Results

What It Means

What is earnings yield?

Formula

Example

How to Use the Earnings Yield Calculator

Choose your input method

Enter the required inputs

Review earnings yield and implied P/E

Interpret the category band

Refine, compare, or reset

Frequently Asked Questions

Methodology & Sources

Bibliography

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