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General Dynamics Corp  (NYSE:GD) Earnings Yield %: 4.72% (As of today)

The earnings yield is an indication of how much return shareholders' investment in the company earned over the past 12 months. The higher the earnings yield is, the better.

As of today, the stock price of General Dynamics Corp is $205.72. General Dynamics Corp's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Jun. 2017 was $9.72. Therefore, General Dynamics Corp's earnings yield of today is 4.72%.

The earnings yield does not consider the growth of the business. A better indicator of the attractiveness of an investment which takes growth into account is the Forward Rate of Return (Yacktman) %. General Dynamics Corp's Forward Rate of Return (Yacktman) % for the quarter that ended in Jun. 2017 was 29.42%. 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.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

General Dynamics Corp Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Earnings Yield % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

General Dynamics Corp Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
Earnings Yield % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Calculation

Earnings yield is the reciprocal of the P/E Ratio.

General Dynamics Corp's Earnings Yield for today is calculated as

Earnings Yield=Earnings per Share (Diluted) (TTM)/Share Price
=9.72/205.72
=4.72 %

General Dynamics Corp's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Jun. 2017 was 2.21 (Sep. 2016 ) + 2.58 (Dec. 2016 ) + 2.48 (Mar. 2017 ) + 2.45 (Jun. 2017 ) = $9.72 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

It can also be calculated from the numbers for the whole company:

Earnings Yield=Net Income /Market Cap (M)

The earnings in the calculation is the Trailing Twelve Months earnings.


Explanation

If the P/E ratio is an indication of how many years it takes for the company to earn back the stock price shareholders pay to buy the shares, the earnings yield is an indication of how much return shareholders’ investment in the company earned over the past 12 months. The higher the earnings yield is, the better.

If a company loses money, the earnings yield is negative. This gives a more straightforward indication that the company is losing money. This is an advantage of using earnings yield instead of the P/E ratio in valuation. For valuation purposes, the P/B Ratio and the P/S Ratio should be used for companies that are losing money.

Like the P/E ratio, the earnings yield can be used to compare investments in different industries. It can even be used to compare the attractiveness of different asset classes such as bonds and cash. Of course, the earnings yield should not be the only factor in deciding which asset classes to invest.

Also similar to the P/E ratio, the earnings yield does not consider the growth of the business. A growing company with the same earnings yield should be more attractive than a company that has the same earnings yield but does not grow.

A better indicator of the attractiveness of an investment which takes growth into account is the Forward Rate of Return (Yacktman) %.

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Be Aware

Just like the P/E Ratio, non-recurring items such as selling part of the business, selling a previous investment, etc., can affect earnings yield dramatically. The earning yield is also a poor indication for cyclical companies. When a cyclical stock has a high earnings yield it is usually at the peak of its cycle.


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