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Spartech Corporation (NYSE:SEH)
Earnings Yield (Joel Greenblatt)
3.92% (As of Oct. 2012)

Spartech Corporation's enterprise value for the quarter that ended in Oct. 2012 was $399 Mil. Spartech Corporation's Operating Income for the trailing twelve months (TTM) ended in Oct. 2012 was $16 Mil. Spartech Corporation's Earnings Yield (Joel Greenblatt) for the quarter that ended in Oct. 2012 was 3.92%.

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

SEH's Earnings Yield (Joel Greenblatt)is ranked lower than
74% of the 1365 Companies
in the Global Rubber & Plastics industry.

( Industry Median: 7.30 vs. SEH: 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. Spartech Corporation's Forward Rate of Return for the quarter that ended in Oct. 2012 was 26.78%. 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.


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.

Spartech Corporation's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Oct. 2012 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=15.613/398.30176
=3.92 %

Spartech Corporation's Earnings Yield (Joel Greenblatt) for the quarter that ended in Oct. 2012 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=15.615/399
=3.91 %

Spartech Corporation's Operating Income for the trailing twelve months (TTM) ended in Oct. 2012 was -0.526 (Jan. 2012 ) + 8.549 (Apr. 2012 ) + 5.14 (Jul. 2012 ) + 2.452 (Oct. 2012 ) = $16 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.

Spartech Corporation Annual Data

Oct03Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12
earning_yield_greenblatt 8.6423.8733.447.898.830.005.170.000.003.92

Spartech Corporation Quarterly Data

Jul10Oct10Jan11Apr11Jul11Oct11Jan12Apr12Jul12Oct12
earning_yield_greenblatt 3.070.000.000.000.000.000.000.000.003.92
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