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Esterline Technologies (NYSE:ESL)
Earnings Yield (Joel Greenblatt)
5.73% (As of Oct. 2014)

Esterline Technologies's enterprise value for the quarter that ended in Oct. 2014 was $4,050 Mil. Esterline Technologies's Operating Income for the trailing twelve months (TTM) ended in Oct. 2014 was $232 Mil. Esterline Technologies's Earnings Yield (Joel Greenblatt) for the quarter that ended in Oct. 2014 was 5.73%.

ESL' s 10-Year Earnings Yield (Joel Greenblatt) Range
Min: 5   Max: 16.7
Current: 6.1

5
16.7

During the past 13 years, the highest Earnings Yield (Joel Greenblatt) of Esterline Technologies was 16.70%. The lowest was 5.00%. And the median was 7.50%.

ESL's Earnings Yield (Joel Greenblatt)is ranked higher than
80% of the 313 Companies
in the Global Aerospace & Defense industry.

( Industry Median: 6.50 vs. ESL: 6.10 )

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. Esterline Technologies's Forward Rate of Return for the quarter that ended in Oct. 2014 was 6.05%. 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.

Esterline Technologies's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Oct. 2014 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=243.822/4050.1038
=6.02 %

Esterline Technologies's Earnings Yield (Joel Greenblatt) for the quarter that ended in Oct. 2014 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=231.97/4,050
=5.73 %

Esterline Technologies's Operating Income for the trailing twelve months (TTM) ended in Oct. 2014 was 45.787 (Jan. 2014 ) + 54.996 (Apr. 2014 ) + 58.641 (Jul. 2014 ) + 72.546 (Oct. 2014 ) = $232 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.

Esterline Technologies Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
earning_yield_greenblatt 8.047.507.4112.639.039.297.697.637.825.73

Esterline Technologies Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
earning_yield_greenblatt 5.547.637.136.097.307.826.506.166.445.73
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