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4 High Earnings Yield Picks That You Shouldn't Ignore
Investors often use the P/E ratio and other valuation metrics to pick undervalued stocks with solid upside potential. One can also use another interesting ratio. Earnings yield, expressed in percentage, is calculated as (Annual Earnings per Share/Market Price) x 100.
While comparing stocks, if other factors are similar, investors can look out for stocks with higher earnings yield. This is because stocks with higher earnings yield have the potential of providing comparatively greater returns. Albemarle Corp., Chevron Corp., Jazz Pharmaceuticals and Cummins Inc. are some stocks boasting high earnings yield.
Just like the case with dividend yield, firms with higher earnings yield are considered underpriced, while those with lower earnings yield are seen as overpriced. Earnings yield captures both the tangible and intangible yield of a firm, as opposed to dividend yield, which only takes into account the tangible yield.
Importantly, earnings yield can also be used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In this situation, investing in the stock market would be a better option for a value investor.
Earnings Yield: Simply the Inverse of P/E
Earnings yield is nothing but the reciprocal of one of the most popular valuation metrics, i.e., the P/E ratio (stock price/earnings per share). In fact, as the concept of earnings yield is already indirectly captured in the P/E ratio, earnings yield as an investment valuation metric is not as widely used as the P/E ratio.
Having said that, it should be noted that earnings yield is an important tool for investors with exposure to both stocks and bonds. In fact, with regard to this, earnings yield can be more illuminating than the traditional P/E ratio, as the former facilitates the comparison of stocks with fixed-income securities.
Here we discuss four of the 131 stocks that qualified the screen:
Albemarle: Charlotte-based Albemarle is a premier specialty chemicals company with leading positions in attractive end markets globally.Albemarle remains focused on strengthening its lithium business and is taking actions to grow its key businesses. It is also expected to gain from synergies of the Rockwood acquisition and cost actions.
The Zacks Consensus Estimate for ALB's 2022 earnings and sales implies year-over-year growth of 430.7% and 124%, respectively. The 2022 bottom-line estimate has been revised upward by 16 cents a share over the past seven days.
Chevron: California-based Chevron is one of the leading integrated oil and gas companies. The acquisition of Noble Energy has expanded Chevron's presence in the DJ Basin and the Permian Basin.The takeover is also estimated to generate significant cost savings. The company's strong financials augur well.
The Zacks Consensus Estimate for CVX's 2022 earnings and sales implies year-over-year growth of 127.3% and 46%, respectively. The 2022 bottom-line estimate has been revised upward by $1.1 a share over the past seven days.
Jazz: Ireland-based Jazz is a specialty biopharmaceutical company with a focus in the areas of neuroscience and oncology. The acquisition of GW Pharma diversified its commercial portfolio by adding a third high-growth commercial franchise of cannabidiol drugs to the business. Jazz's revenues continue to benefit from strong demand for newer drugs like Xywav, Epidiolex and Rylaze.
The Zacks Consensus Estimate for JAZZ's 2022 earnings and sales implies year-over-year growth of 7% and 18%, respectively. The 2022 bottom-line estimate has been revised upward by 2 cents a share over the past seven days.
Cummins: Cummins is the largest engine producer in the world and maintains a diverse global footprint. Its position as a global power leader with dominant market and commitment to moving toward a carbon-neutral future is commendable.The buyout of Meritor positions Cummins as a leading provider of integrated powertrain solutions across internal combustion and electric power applications.
The Zacks Consensus Estimate for CMI's 2022 earnings and sales implies year-over-year growth of 18.4% and 12%, respectively. The 2022 bottom-line estimate has been revised upward by 2 cents a share over the past seven days.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
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Zacks.com featured highlights include Albemarle, Chevron, Jazz Pharmaceuticals and Cummins
For Immediate Release
Chicago, IL – October 31, 2022 – Stocks in this week’s article are Albemarle Corp. (ALB - Free Report) , Chevron Corp. (CVX - Free Report) , Jazz Pharmaceuticals (JAZZ - Free Report) and Cummins Inc. (CMI - Free Report) .
4 High Earnings Yield Picks That You Shouldn't Ignore
Investors often use the P/E ratio and other valuation metrics to pick undervalued stocks with solid upside potential. One can also use another interesting ratio. Earnings yield, expressed in percentage, is calculated as (Annual Earnings per Share/Market Price) x 100.
While comparing stocks, if other factors are similar, investors can look out for stocks with higher earnings yield. This is because stocks with higher earnings yield have the potential of providing comparatively greater returns. Albemarle Corp., Chevron Corp., Jazz Pharmaceuticals and Cummins Inc. are some stocks boasting high earnings yield.
Just like the case with dividend yield, firms with higher earnings yield are considered underpriced, while those with lower earnings yield are seen as overpriced. Earnings yield captures both the tangible and intangible yield of a firm, as opposed to dividend yield, which only takes into account the tangible yield.
Importantly, earnings yield can also be used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In this situation, investing in the stock market would be a better option for a value investor.
Earnings Yield: Simply the Inverse of P/E
Earnings yield is nothing but the reciprocal of one of the most popular valuation metrics, i.e., the P/E ratio (stock price/earnings per share). In fact, as the concept of earnings yield is already indirectly captured in the P/E ratio, earnings yield as an investment valuation metric is not as widely used as the P/E ratio.
Having said that, it should be noted that earnings yield is an important tool for investors with exposure to both stocks and bonds. In fact, with regard to this, earnings yield can be more illuminating than the traditional P/E ratio, as the former facilitates the comparison of stocks with fixed-income securities.
Here we discuss four of the 131 stocks that qualified the screen:
Albemarle: Charlotte-based Albemarle is a premier specialty chemicals company with leading positions in attractive end markets globally.Albemarle remains focused on strengthening its lithium business and is taking actions to grow its key businesses. It is also expected to gain from synergies of the Rockwood acquisition and cost actions.
The Zacks Consensus Estimate for ALB's 2022 earnings and sales implies year-over-year growth of 430.7% and 124%, respectively. The 2022 bottom-line estimate has been revised upward by 16 cents a share over the past seven days.
Chevron: California-based Chevron is one of the leading integrated oil and gas companies. The acquisition of Noble Energy has expanded Chevron's presence in the DJ Basin and the Permian Basin.The takeover is also estimated to generate significant cost savings. The company's strong financials augur well.
The Zacks Consensus Estimate for CVX's 2022 earnings and sales implies year-over-year growth of 127.3% and 46%, respectively. The 2022 bottom-line estimate has been revised upward by $1.1 a share over the past seven days.
Jazz: Ireland-based Jazz is a specialty biopharmaceutical company with a focus in the areas of neuroscience and oncology. The acquisition of GW Pharma diversified its commercial portfolio by adding a third high-growth commercial franchise of cannabidiol drugs to the business. Jazz's revenues continue to benefit from strong demand for newer drugs like Xywav, Epidiolex and Rylaze.
The Zacks Consensus Estimate for JAZZ's 2022 earnings and sales implies year-over-year growth of 7% and 18%, respectively. The 2022 bottom-line estimate has been revised upward by 2 cents a share over the past seven days.
Cummins: Cummins is the largest engine producer in the world and maintains a diverse global footprint. Its position as a global power leader with dominant market and commitment to moving toward a carbon-neutral future is commendable.The buyout of Meritor positions Cummins as a leading provider of integrated powertrain solutions across internal combustion and electric power applications.
The Zacks Consensus Estimate for CMI's 2022 earnings and sales implies year-over-year growth of 18.4% and 12%, respectively. The 2022 bottom-line estimate has been revised upward by 2 cents a share over the past seven days.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2006055/4-high-earnings-yield-picks-that-you-shouldnt-ignore
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.