John Neff · Total return ratio
Adds earnings growth rate and dividend yield, then divides by the P/E — a single number capturing cheapness, growth, and income together to find underpriced value stocks.
- Guide level
- Practical
- Output
- Screening and validation
Core formula
Total return ratio = (earnings growth% + dividend yield%) / P/EHow to interpret it
Adds earnings growth rate and dividend yield, then divides by the P/E — a single number capturing cheapness, growth, and income together to find underpriced value stocks.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
No built-in market or sector benchmark to compare against; not applicable to non-dividend payers; a screening signal, not a target price.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.