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January 14th, 2016, 07:55 AM  #1 
Newbie Joined: Jan 2016 From: Sweden Posts: 1 Thanks: 0  Growth rate
I would greatly appreciate it if someone would help me with this. Let's say I have company A and Company B. Company A share sells for 500 dollar and have earnings of 5 dollar/share. Company B share sells for 100 dollar and have earnings of 7 dollar/share. This would give: Company A an earnings yield of 5/500 = 1% Company B an earnings yield of 7/100 = 7% In a 0 growth scenario company B looks better (let's say I only care about earnings). But what if I introduce future earnings growth into the picture? How much larger does company B future earnings growth need to be to be the better choice? Can someone please explain the right way to think about this? Last edited by skipjack; January 14th, 2016 at 12:33 PM. 

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