Here you will find a list and definitions for all the metrics in Asset Camp’s valuation and earnings reports.

These are the most common metrics professional and individual investors use to analyze stocks and stock indexes.

Asset Camp’s Stock Market Valuation and Earnings Reports include a historical chart of each of these metrics to understand where the metric stands relative to its long-term average.

Each entry in this list defines the metric and what it is used for.

## Valuations #

**Earnings Yield**

A measure of how much investors are paying for a dollar’s worth of current earnings expressed as a percentage yield. Earnings yield is the inverse of the price-to-earnings ratio (i.e., earnings yield = 1/price-to-earnings ratio).

The earnings yield is calculated by summing the net income per share of each index holding and dividing by the sum of the share prices for the stocks that comprise the index.

The earnings per share number used in calculating earnings yield is based on each company’s net income over the previous twelve months. Companies with negative earnings are included in the earnings yield calculation.

**Forward Earnings Yield**

A measure of how much investors are paying for a dollar’s worth of expected earnings expressed as a percentage yield. Forward earnings yield is the inverse of the price-to-earnings ratio (i.e., earnings yield = 1/price-to-earnings ratio).

The earnings yield is calculated by summing the expected net income per share of each index holding and dividing by the sum of the share prices for the stocks that comprise the index.

The expected earnings per share number is based on the consensus earnings expectations of each underlying company.

Consensus earnings estimates are derived from the work of professional analysts that follow each company as compiled by Refinitiv I/B/E/S and Toyo Keizai.

**Price-to-Earnings Ratio (P/E Ratio)**

A measure of how much investors are paying for a dollar’s worth of current earnings.

The P/E ratio is calculated by summing the share prices of the index’s stock holdings and dividing by the sum of each index holding’s earnings per share.

The earnings per share number is based on each company’s net income over the previous twelve months. Companies with negative earnings are included in the P/E ratio calculation.

**Forward Price-to-Earnings Ratio (Forward P/E Ratio)**

A measure of how much investors are paying for a dollar’s worth of expected earnings.

The forward P/E ratio is calculated by summing the share prices of the index’s stock holdings and dividing by the sum of the expected earnings per share of each index holding.

The expected earnings per share number is based on the consensus earnings expectations of each underlying company.

Consensus earnings estimates are derived from the work of professional analysts that follow each company as compiled by Refinitiv I/B/E/S and Toyo Keizai.

**Price-to-Cash Flow Ratio**

A measure of how much investors are paying for a dollar’s worth of current cash flow.

The price-to-cash flow ratio is calculated by summing the share prices of the index’s stock holdings and dividing by the sum of the index holdings’ cash earnings per share.

The cash earnings per share number is based on each company’s net income plus non-cash expenses, such as asset depreciation, over the previous twelve months.

**Price-to-Book Value**

A measure of how much investors are paying for a dollar’s worth of shareholders’ equity. Shareholders’ equity is also known as book value.

Book value measures the amount of equity capital raised by a company through common stock offerings plus earnings that have not been distributed as dividends to shareholders.

The price-to-book value ratio is calculated by summing the share prices of the index’s stock holdings and dividing by the aggregate of the underlying index holdings’ book value.

## Dividends #

**Dividend Yield**

A measure of how much cash per share is distributed to common stockholders. Those cash distributions are known as dividends.

The dividend yield is calculated by summing the dividend per share of each index holding and dividing by the sum of the share prices for the stocks that comprise the index.

**Payout Ratio**

A measure of the percentage of profits being distributed to common stock shareholders as dividends. Dividends are cash distributions paid to investors.

The payout ratio is calculated by multiplying the index price-to-earnings ratio by the index dividend yield.

Multiplying the P/E ratio by the dividend yield is mathematically equivalent to dividing aggregate dividends by aggregate net income.

## Earnings #

**1-Year Trailing Earnings Per Share **

The total net income per share of the underlying index holdings over the previous twelve months.

The net income per share excludes special one-time charges and preferred stock dividends.

The net income per share can be impacted by currency fluctuations between local currencies and the U.S. dollar. A strengthening dollar will lead to a lower earnings per share for non-U.S. indices when converted to dollars while a weakening dollar will lead to a higher earnings per share when converted to dollars.

**1-Year Trailing Earnings Per Share Growth**

The percentage increase or decrease in net income per share of the underlying index holdings over the previous twelve months.

The net income per share excludes special one-time charges and preferred stock dividends.

The 1-year trailing earnings per share growth rate can be impacted by currency fluctuations between local currencies and the U.S. dollar.

A strengthening dollar will lead to a lower earnings per share growth rate for non-U.S. indices when converted to dollars while a weakening dollar will lead to a higher earnings per share growth rate when converted to dollars.

**1-Year Forward Earnings Per Share Growth**

The expected growth rate of total net income per share for the underlying index holdings.

The expected net income per share is based on consensus earnings estimates from professional financial analysts who follow each company as compiled by Refinitiv I/B/E/S and Toyo Keizai.

**5-Year Historical Earnings Per Share Growth**

A measure of how much the aggregate earnings per share for the underlying index holdings have grown in U.S. dollar terms over the previous five years.

The earnings per share growth rate can be impacted by currency fluctuations between local currencies and the U.S. dollar. A strengthening dollar will lead to a lower earnings per share growth rate for non-U.S. indices while a weakening dollar will lead to a higher earnings per share growth rate.

The earnings per share growth rate has been annualized.

**5-Year Historical Sales Per Share Growth**

An estimate of the average annual revenue growth rate of the underlying index holdings for the previous five years.

The 5-year historical sales per share growth rate is estimated by MSCI using statistical regression analysis.

**Long-term Forward Earnings Per Share Growth (3 to 5 Years)**

An estimate of the expected annual aggregate net income per share growth rate for the underlying index holdings over the next three-to-five years.

The expected earnings growth rate is based on the consensus of longer-term earnings estimates from professional financial analysts who follow each company as compiled by Refinitiv I/B/E/S and Toyo Keizai.

**Return on Equity**

A measure of the profitability of the companies that comprise the index.

The return on equity can be calculated by dividing the aggregate net income for the index constituents by the aggregate shareholders’ equity.

Shareholders’ equity, also known as book value, is equity capital raised by a company through common stock offerings plus earnings that have not been distributed as dividends to shareholders.

MSCI calculates the return on equity by dividing the index-level price-to-book value by the index-level price-to-earnings ratio.