Vainolo's Blog

How I calculate P/E and dividend returns

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In some posts and in the analysis worksheets I calculate these values, but I have found that their values differ from the ones posted in investment sites. This require some explanation.

First of all I have no idea how these sites calculate the values. And second, when I do understand how the did it I think the value is not correct. So I have my own way of calculating them, which goes as follows:

1) P/E: calculated using last four quarters diluted earnings per share as posted by the company. Note that the fourth quarter earnings are also calculated by subtracting the previous three quarterly earnings from the year’s earnings.

2) Dividend yield: the yield is calculated relative to the stock’s price at the date the dividends are payed, and they are averaged using a simple average (sum divided by years)

Now that I think about it I see that my dividend yield calculation must be revisited. I will do this shortly and update my excels.

Written by vainolo

August 15th, 2010 at 6:21 pm

Posted in Invest

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