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PetSmart Inc's enterprise value for the quarter that ended in Oct. 2014 was $7,540 Mil. PetSmart Inc's Earnings Before Interest and Taxes (EBIT) for the trailing twelve months (TTM) ended in Oct. 2014 was $702 Mil. PetSmart Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Oct. 2014 was 9.41%.
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. PetSmart Inc's Forward Rate of Return for the quarter that ended in Oct. 2014 was 21.78%. 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.
PetSmart Inc's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Jan. 2014 is calculated as
|Earnings Yield (Joel Greenblatt)||=||Earnings Before Interest and Taxes (EBIT)||/|