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Titanium Metals Corporation (NYSE:TIE)
Earnings Yield (Joel Greenblatt)
6.99% (As of Sep. 2012)

Titanium Metals Corporation's enterprise value for the quarter that ended in Sep. 2012 was $2,331 Mil. Titanium Metals Corporation's Operating Income for the trailing twelve months (TTM) ended in Sep. 2012 was $175 Mil. Titanium Metals Corporation's Earnings Yield (Joel Greenblatt) for the quarter that ended in Sep. 2012 was 6.99%.

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

TIE's Earnings Yield (Joel Greenblatt)is ranked lower than
100% of the Companies
in the Global industry.

( Industry Median: vs. TIE: 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. Titanium Metals Corporation's Forward Rate of Return for the quarter that ended in Sep. 2012 was -3.88%. 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.

Titanium Metals Corporation's Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Dec. 2011 is calculated as

Earnings Yield (Joel Greenblatt)=Operating Income/Enterprise Value
=174.6/2620.638
=6.66 %

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

Earnings Yield (Joel Greenblatt)=Operating Income (TTM)/Enterprise Value
=174.6/2,331
=7.49 %

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. Titanium Metals Corporation's Operating Income for the trailing twelve months (TTM) ended in Sep. 2012 was $175 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.

Titanium Metals Corporation Annual Data

Dec02Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11
earning_yield_greenblatt 0.000.005.827.327.978.6914.162.624.306.78

Titanium Metals Corporation Semi-Annual Data

Jun10Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12
earning_yield_greenblatt 2.142.854.304.635.216.426.787.258.246.99
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