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The Money Maze TMM Nº 001

P/E Ratio, EPS & Dividend Yield Explained Simply for SA Investors

7 min

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Confused by P/E ratios, EPS, and dividend yield? This guide explains these key stock market terms for South African investors in plain language with humour and practical examples.

Show notes

If you’ve ever opened EasyEquities and wondered what on earth P/E, EPS, and Dividend Yield mean, you’re not alone. These little acronyms are like that oke at a braai who knows everything but explains nothing. Today, we’re decoding these bad boys so you can invest without feeling like you’re buying airtime in the dark.

1. P/E Ratio – The Tinder Bio of Stocks

P/E stands for Price-to-Earnings Ratio, and it tells you how many Rands you’re paying for every Rand of earnings a company makes.

Formula:
P/E = Price ÷ Earnings per Share (EPS)

Example:
If Shoprite’s share price is R180 and its EPS is R10:
P/E = 180 ÷ 10 = 18
That means you’re paying R18 for every R1 the company earns.

Interpretation:

  • High P/E: Investors think the company has growth potential (or it’s just overpriced like avo toast in Cape Town).

  • Low P/E: Could be a bargain, or the company is about to ghost the market like your ex.

2. EPS – The Salary Slip of a Company

EPS stands for Earnings Per Share. It measures how much profit the company makes per share.

Formula:
EPS = Total Profit ÷ Number of Shares

Why care?
EPS growth usually means the company is making more per share, which often leads to higher share prices. Unless management does something stupid, like buying a football club.

3. Dividend Yield – The Boerie Roll of Investing

Dividend Yield tells you how much cash you’re getting back as a percentage of the share price.

Formula:
Dividend Yield = (Annual Dividend per Share ÷ Share Price) × 100%

Example:
If Sasol pays R10 per share and the share price is R200:
Dividend Yield = (10 ÷ 200) × 100% = 5%

That’s your juicy return, like getting free chakalaka with your braai pack.

How They Work Together

  • P/E: How expensive is this share based on earnings?

  • EPS: How much profit per share?

  • Dividend Yield: How much cash are you getting back?

Use all three together before you buy. Because investing without checking these is like proposing after the first date – looks romantic until the bank account screams.

Your Stokvel Starter Pack of Stock Market Lingo: 

  • P/E Ratio: Price ÷ EPS

  • EPS: Profit per share

  • Dividend Yield: Dividend ÷ Price × 100%

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    Disclaimer

    While my jokes may be spicier than a bunny chow in Durban, remember: This is not financial advice. Do your own research, chat to a licensed advisor,

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