Morningstar Report: Stock Data Definitions
  Stock Valuation
   
   Valuation Ratios
 

Price/Earnings
A stock's current price divided by the company's trailing 12-month earnings per share. For comparison, we also show the average price/earnings ratios for the company's industry, the S&P 500, and the stock's own five-year average.

Price
/Book

The most recent stock price divided by the most recent book value per share. For comparison, we also show the average price/book ratios for the company's industry, the S&P 500, and the stock's own five-year average.


Price/Sales
A stock's current price divided by the company's sales per share over the trailing 12 months. For comparison, we also show the average price/sales ratios for the company's industry, the S&P 500, and the stock's own five-year average.

Price
/Cash flow
A stock's most recent price divided by the company's cash flow per share over the trailing 12 months. Price/cash flow shows the ability of a business to generate cash and can be an effective gauge of liquidity and solvency. For comparison, we also show the average price/cash-flow ratios for the company's industry, the S&P 500, and the stock's own three-year average.


Dividend Yield %

A stock's most recent four quarters' worth of dividends as a percentage of the current stock price. For comparison, we also show the average dividend yields for the company's industry, the S&P 500, and the stock's own five-year average.


Price
/Earnings-Graph

This graph shows two things: whether a stock has become more or less expensive based on price/earnings ratios, and whether it has become more or less expensive versus the S&P 500. We graph each stock's historical price/earnings ratios versus the historical price/earnings ratios of the S&P 500. In each year, the bar on the right represents the P/E of the stock, while the bar on the left represents the P/E of the S&P 500. Each P/E is the P/E at the end of the calendar year. The price used is the end-of-year price.

Price/Sales–Graph
This graph shows two things: whether a stock has become more or less expensive based on price/sales ratios, and whether it has become more or less expensive versus the S&P 500. We graph each stock's historical price/sales ratios versus the historical price/sales ratios of the S&P 500. In each year, the bar on the right represents the price/sales ratio of the stock, while the bar on the left represents the price/sales ratio of the S&P 500. Each price/sales is the price/sales at the end of the calendar year. The price used is the end-of-year price.

 

   Current Rates of Return
  This graph shows various ways of calculating the current rate of return on stock.

The earnings yield shows the company's annual earnings per share as a percentage of the share price. If you buy a stock with an earnings yield of 7%, the company's annual earnings per share represent 7% of the share price. Earnings yield is the inverse of the P/E ratio. A 7% earnings yield therefore works out to a P/E of about 14.

The dividend yield shows the return to shareholders through dividends. If you buy a stock with a 3% dividend yield, the company is paying $0.03 in dividends for every dollar you paid for the stock. Typically slow-growing, mature companies sport high dividend yields, while fast-growing companies, since they pay little of their earnings out as dividends, tend to have tiny dividend yields.

The cash return % shows the cash return to shareholders. In other words, if you buy a stock with a 5% cash return, the company is generating $0.05 in cash annually for each dollar you paid for the stock. Cash return is based on free cash flows, or cash flows after capital investment.

For each of these three rates of return, we also show the S&P averages for comparison. The averages are market-cap weighted.

   Forward Valuation Ratios
  Forward Price/Earnings
A stock's current price divided by the mean earnings estimate for the current fiscal year. For comparison, we also show the industry average and the S&P 500 average.


PEG Ratio
A stock's price/earnings ratio divided by the company's projected EPS growth. The price/earnings ratio used in the numerator of this ratio is calculated by taking the current share price and dividing by the mean EPS estimate for the current fiscal year. A PEG Ratio means nothing in itself, so for comparison we show the industry and S&P 500 averages.


PEG Payback (Yrs)
The number of years it would take for a company's cumulative earnings (beginning at a base level of $1.00) to equal the stock's current P/E ratio, assuming that the company continues to increase its annual earnings at the growth rate used to calculate the PEG ratio. A PEG payback period of six years, for example, means that it would take six years for an investor to recoup the price paid now for $1 of corporate earnings (the P/E ratio).

Equivalently, the PEG payback period is the number of years it would take for the cumulative earnings of a company (based on the forecast of future earnings growth used to calculate the PEG ratio) to equal the current price of the stock. In other words, the PEG payback period is the amount of time it would take for the company to "earn" its stock price.

For comparison, we also show the PEG Payback period for both the industry and the S&P 500.

 
 

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