Tipping Point: Can you compare valuation of a stock with that of a bond?

Yes, earnings yield allows you to do so. P/E ratio is calculated by dividing a stock's price with its past or future earnings

Yes, earnings yield allows you to do so. The price-to-earnings (P/E) ratio is calculated by dividing a stock’s price with its past or future earnings. Currently, the 10-year benchmark government bond yield is about 6.81 per cent. Divide 100 by 6.81 and you get 14.68. This implies that any stock that currently has a P/E ratio of more than 14.68 would be deemed to be more expensive (or have a lower yield) than the benchmark 10-year government bond.  

How is this useful?  

This is a useful shortcut through which you can quickly find out whether stocks or bonds are more