Operating Earnings Yield
The operating earnings yield is annualized operating income as a percentage of the total value of the company's common stock. A ratio of nine percent means that annual operating earnings equivalent to nine percent of the company's market cap are being generated yearly. Generally, the higher this ratio is, the better.
Some investors consider this a better indicator of future earning power than earnings yield since the earnings number excludes tax effects, non-operating income and expenses, discontinued operations, extraordinary items, preferred stock dividends and accounting change differences.
YCharts calculation: TTM Operating Earnings / Market Capitalization
TTM Operating Earnings excludes:
- Earnings from discontinued operations
- Extraordinary items
- Preferred stock dividends
- Accounting changes
- Other non-operating earnings and expenses