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rue21 Inc (NAS:RUE)
Earnings Yield (Joel Greenblatt)
5.91% (As of Jul. 2013)

rue21 Inc's enterprise value for the quarter that ended in Jul. 2013 was $932.4 Mil. rue21 Inc's Operating Income for the trailing twelve months (TTM) ended in Jul. 2013 was $55.1 Mil. rue21 Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Jul. 2013 was 5.91%.

RUE' s 10-Year Earnings Yield (Joel Greenblatt) Range
Min: 0   Max: 0
Current: 0

RUE's Earnings Yield (Joel Greenblatt)is ranked lower than
80% of the 982 Companies
in the Global Apparel Stores industry.

( Industry Median: 7.80 vs. RUE: 0.00 )

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. rue21 Inc's Forward Rate of Return for the quarter that ended in Jul. 2013 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.

rue21 Inc's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Jan. 2013 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=68.461/676.34913
=10.12 %

rue21 Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Jul. 2013 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=55.075/932.4
=5.91 %

rue21 Inc's Operating Income for the trailing twelve months (TTM) ended in Jul. 2013 was 12.846 (Oct. 2012 ) + 23.543 (Jan. 2013 ) + 16.946 (Apr. 2013 ) + 1.74 (Jul. 2013 ) = $55.1 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.

rue21 Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13
earning_yield_greenblatt 0.000.000.000.000.000.005.667.4512.0810.66

rue21 Inc Quarterly Data

Apr11Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13
earning_yield_greenblatt 8.207.579.6812.089.8912.479.7910.669.575.91
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