• Yield is 12-month earnings divided by share price.
  • Yield is inversely proportional to P/E.
  • profitability is one of the indicators of value; a low ratio may indicate overvalued stocks, while a high value may indicate undervalued stocks.
  • The company’s growth prospects are an important factor when using profitability. Stocks with high growth potential tend to be valued higher and may have poor returns even if their price rises.