PRICE TO EARNINGS RATIO (P/E) is a performance benchmark that can be used as a comparison against other companies or within the stocks own historical performance. For instance, if a stock has historically run at a P/E of 35 and the current P/E is 12, you may want to explore the reasons for the drastic change. If you believe that the ratio is too low, you may want to buy the stock. You will generally find a P/E ratio based on either the prior reporting years earnings, or the earnings of the prior four quarters added together (LTM or Latest Twelve Months). Formula: Stock Price divided by the Earnings Per Share.
HIGH YIELD (JUNK) is bonds and preferred stocks having an S&P/Moody's rating of BB+/Ba1 or lower, and NAIC ratings of"3", "4", "5", or "6". Below investment grade securities have greater risk and therefore compensate investors with higher market yields. In addition to new issues, high yield securities can evolve from older issues with declining ratings, or can be created through leveraged buyouts where management uses the assets of the company as collateral for the issue.
MARKUP is the amount added to the cost of goods in order to produce the desired profit.
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