Today I purchased 98 shares of Gamestop (GME) at $26.06 per share, or $2,553.88. I also purchased 113 shares of Kelly Services, Inc. (Kelly Services Inc.) at $22.40, or $2,531.20.
Gamestop currently has a P/E ratio of 7.06, or an “earnings yield” (1/PE Ratio) of 14.16%. The market capitalization is currently $2.7 billion and total revenues are $9.3 billion. There is no long term debt and the company is producing stable earnings. Gamestop has lagged the performance of the S&P 500, losing 11.93%.
Kelly Services Inc. (KELYA)
Kelly Services is a staffing agency boasting an earnings yield of 15.27%. The market capitalization is $870 million and revenues are $5.5 billion. Long term debt is minimal at $8.7 million with assets of $2 billion. Like Gamestop, the stock produces consistent earnings.
I typically prefer stocks that are down for the year, but Kelly Services has been on a tear, up 47.81% in the last calendar year thanks to a tightening labor market. Regardless, one can’t ignore how cheap the stock still is relative to its earnings.
I prefer to express P/E ratios in terms of earnings yield. Rather than saying the stock trades at 10 times earnings, I think it makes more sense to refer to it as a 10% earnings yield. It would be helpful if more investors thought in these terms and they would be less likely to buy crazy overpriced stock. Think about that the next time you buy a stock at 50 times earnings, or a 2% earnings yield!
PLEASE NOTE: The information provided on this site is not financial advice and I am not a financial professional. I am an amateur and the purpose of this site is to simply monitor my successes and failures.