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Sycamore Networks Inc  (OTCPK:SCMR) Earnings Yield (Joel Greenblatt) %: -1,000.00% (As of Jan. 2013)

Sycamore Networks Inc's Enterprise Value for the quarter that ended in Jan. 2013 was $0.00 Mil. Sycamore Networks Inc's EBIT for the trailing twelve months (TTM) ended in Jan. 2013 was $-19.04 Mil. Sycamore Networks Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in Jan. 2013 was -1,000.00%.

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 (Yacktman) %. Sycamore Networks Inc's Forward Rate of Return (Yacktman) % for the quarter that ended in Jan. 2013 was -27.25%. 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.

Sycamore Networks Inc Annual Data

Jul03 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12
Earnings Yield (Joel Greenblatt) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -22.94 -20.79 -19.46 -11.43 -34.97

Sycamore Networks Inc Quarterly Data

Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Oct09 Jan10 Apr10 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13
Earnings Yield (Joel Greenblatt) % 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 -7.25 -14.99 -34.97 -90.09 -1,000.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

In his book, The Little That Beat the Market, hedge fund manager Joel Greenblatt defines Earnings Yield as operating income divided by enterprise value.

Sycamore Networks Incs Earnings Yield (Joel Greenblatt) for the fiscal year that ended in Jul. 2012 is calculated as

Earnings Yield (Joel Greenblatt)=EBIT/Enterprise Value
=-13.958/39.921
=-34.96 %

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

Earnings Yield (Joel Greenblatt)=EBIT (TTM)/Enterprise Value
=-19.037/0.00
= %

Sycamore Networks Inc's EBIT for the trailing twelve months (TTM) ended in Jan. 2013 was -5.251 (Apr. 2012 ) + -2.96 (Jul. 2012 ) + -6.784 (Oct. 20 ) + -4.042 (Jan. 2013 ) = $-19.04 Mil.



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 (Yacktman) % based on Don Yacktman's definition is a better measure of the expected rate of return for a stock.


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