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ARMOUR Residential REIT Inc (NYSE:ARR)
Earnings Yield (Joel Greenblatt)
41.32% (As of Sep. 2014)

ARMOUR Residential REIT Inc's enterprise value for the quarter that ended in Sep. 2014 was $875.6 Mil. ARMOUR Residential REIT Inc's Operating Income for the trailing twelve months (TTM) ended in Sep. 2014 was $362.4 Mil. ARMOUR Residential REIT Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Sep. 2014 was 41.32%.

ARR' s 10-Year Earnings Yield (Joel Greenblatt) Range
Min: 0.9   Max: 149.3
Current: 46.7

0.9
149.3

During the past 7 years, the highest Earnings Yield (Joel Greenblatt) of ARMOUR Residential REIT Inc was 149.30%. The lowest was 0.90%. And the median was 21.40%.

ARR's Earnings Yield (Joel Greenblatt)is ranked higher than
99% of the 830 Companies
in the Global REIT - Residential industry.

( Industry Median: 3.40 vs. ARR: 46.70 )

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. ARMOUR Residential REIT Inc's Forward Rate of Return for the quarter that ended in Sep. 2014 was 0.00%. 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.

ARMOUR Residential REIT Inc's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Dec. 2013 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=385.074/937.5461
=41.07 %

ARMOUR Residential REIT Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Sep. 2014 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=362.433/875.6
=41.39 %

ARMOUR Residential REIT Inc's Operating Income for the trailing twelve months (TTM) ended in Sep. 2014 was 95.448 (Dec. 2013 ) + 98.447 (Mar. 2014 ) + 85.195 (Jun. 2014 ) + 83.343 (Sep. 2014 ) = $362.4 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.

ARMOUR Residential REIT Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13
earning_yield_greenblatt 0.000.000.000.00-0.811.456.86-2.2324.8841.67

ARMOUR Residential REIT Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
earning_yield_greenblatt 0.9413.0024.8821.3240.4938.7641.6743.8632.6841.32
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