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Apple Inc (NAS:AAPL)
Earnings Yield (Joel Greenblatt)
10.33% (As of Dec. 2013)

Apple Inc's enterprise value for the quarter that ended in Dec. 2013 was $476,988 Mil. Apple Inc's Operating Income for the trailing twelve months (TTM) ended in Dec. 2013 was $49,252 Mil. Apple Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Dec. 2013 was 10.33%.

AAPL' s 10-Year Earnings Yield (Joel Greenblatt) Range
Min: 1.5   Max: 19.8
Current: 10.9

1.5
19.8

During the past 13 years, the highest Earnings Yield (Joel Greenblatt) of Apple Inc was 19.80%. The lowest was 1.50%. And the median was 7.40%.

AAPL's Earnings Yield (Joel Greenblatt)is ranked higher than
83% of the 2081 Companies
in the Global Computer Systems industry.

( Industry Median: 6.10 vs. AAPL: 10.90 )

Joel Greenblatt’s definition of earnings yield has the same problems the regular earnings yield does. It does not consider the growth of the company. It only looks at one-year’s business operation. For cyclical companies, the earnings yield is usually highest at the peak of the business cycle. But these earnings are rarely sustainable.

A better indicator of the attractiveness of an investment which takes growth into account is the Forward Rate of Return. Apple Inc's Forward Rate of Return for the quarter that ended in Dec. 2013 was 56.43%. The Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.


Definition

In his book, “The Little That Beat the Market,” hedge fund manager Joel Greenblatt defines Earnings Yield as operating income divided by enterprise value.

Apple Inc's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Sep. 2013 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=48999/405112.3675
=12.10 %

Apple Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Dec. 2013 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=49252/476,988
=10.33 %

Apple Inc's Operating Income for the trailing twelve months (TTM) ended in Dec. 2013 was 12558 (Mar. 2013 ) + 9201 (Jun. 2013 ) + 10030 (Sep. 2013 ) + 17463 (Dec. 2013 ) = $49,252 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

Joel Greenblatt defines the earnings yield using the above equation because it more accurately reflects the company’s profitability relative to its stock price. Items like interest payment and tax etc. are not directly related to the company’s operational profitability.

Enterprise Value instead of market cap (share price) is used in the calculation because it is the real price stock and bond investors together pay for the company.


Be Aware

Joel Greenblatt’s definition of earnings yield has the same problems the regular earnings yield does. It does not consider the growth of the company. It only looks at one-year’s business operation. For cyclical companies, the earnings yield is usually highest at the peak of the business cycle. But these earnings are rarely sustainable.

Forward Rate of Return based on Don Yacktman’s definition is a better measure of the expected rate of return for a stock.


Related Terms

Operating Income, Enterprise Value, Earnings Yield, Forward Rate of Return


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Apple Inc Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
earning_yield_greenblatt 3.274.554.383.7110.558.197.8510.299.2512.09

Apple Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
earning_yield_greenblatt 10.2912.479.5510.209.2511.9913.8714.9312.0910.33
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