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Waters Corp's enterprise value for the quarter that ended in Jun. 2014 was €6,217 Mil. Waters Corp's Operating Income for the trailing twelve months (TTM) ended in Jun. 2014 was €368 Mil. Waters Corp's Earnings Yield (Joel Greenblatt) for the quarter that ended in Jun. 2014 was 5.97%.
During the past 13 years, the highest Earnings Yield (Joel Greenblatt) of Waters Corp was 11.90%. The lowest was 4.00%. And the median was 6.00%.
Joel Greenblatts 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-years 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. Waters Corp's Forward Rate of Return for the quarter that ended in Jun. 2014 was 12.91%. 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.
In his book, The Little That Beat the Market, hedge fund manager Joel Greenblatt defines Earnings Yield as operating income divided by enterprise value.
Waters Corp'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|
Waters Corp's Earnings Yield (Joel Greenblatt) for the quarter that ended in Jun. 2014 is calculated as
|Earnings Yield (Joel Greenblatt)||=||Operating Income (TTM)||/||Enterprise Value|
Waters Corp's Operating Income for the trailing twelve months (TTM) ended in Jun. 2014 was 87.2939882698 (Sep. 2013 ) + 129.351688693 (Dec. 2013 ) + 64.2729905865 (Mar. 2014 ) + 87.5055432373 (Jun. 2014 ) = €368 Mil.
Joel Greenblatt defines the earnings yield using the above equation because it more accurately reflects the companys profitability relative to its stock price. Items like interest payment and tax etc. are not directly related to the companys 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.
Forward Rate of Return based on Don Yacktmans definition is a better measure of the expected rate of return for a stock.
Waters Corp Annual Data
Waters Corp Quarterly Data