What is a Good P/E Ratio?
The Price to Earnings, or P/E ratio, is one of the most basic ways to try and figure out if a stock is generally cheap. The logic behind the P/E ratio is quite simple. The equation for the P/E ratio is simply Price / Earnings. A low P/E is generally considered better than a high […]
Negative PEG Ratio Implications: What Does It Mean? Why Does It Happen?
Updated 10/12/2023 The implications for a negative PEG ratio might not be as bad as you think. It all depends on the reason behind the negative PEG ratio, which breaks into 2 possibilities. One spells trouble while the other might not. In this post, we will discuss: Before digging into the PEG scenarios, we first […]
Trailing Twelve Months (TTM): Why It’s Used and How to Use It
Updated 2/7/2024 When valuing a company, the primary imperative is to use the most up-to-date numbers we can find. Numbers such as prices constantly update in the markets. But the accounting inputs we use come from accounting statements such as the income statement, and those don’t update constantly. So what is the answer? The challenge […]
The Magic Formula to Beat the Market
Updated 1/5/2024 Joel Greenblatt owns one of the best investing records on Wall Street, generating over 40 percent compounded returns during ten years. In 2005, Greenblatt published his seminal book, The Little Book that Beats the Market, describing a method investors can use to beat the market, the Magic Formula. Greenblatt developed and tested the […]
Your Essential Beginner’s Guide to the Forward Price to Earnings (P/E) Ratio
Forward Price to Earnings, or Forward P/E, is an easy ratio for estimating how expensive a stock is compared to its projected (“forward”) earnings. Similar to the Price to Earnings (P/E) ratio, it gives investors an apples-to-apples comparison for every stock in regards to its profitability (earnings) and stock price. The P/E is a common […]
The Basics Behind Using the Price to Earnings Valuation Method on a Stock
The price to earnings valuation method is a simple and quick way to get an idea about how cheap or expensive a stock generally is. Like any tool or framework, the price to earnings (or P/E) ratio is not a perfect estimate of valuation and has its drawbacks. The P/E is useful as a starting […]
What’s the Ideal Quick Ratio? The 3 Simple Questions to Consider
The quick ratio is a worst-case scenario metric. It helps you project if a company could survive if revenues were to dry up. The quick ratio compares the short term assets and liabilities of a company. In general, an ideal quick ratio is one above 1. But that doesn’t tell the entire story, because for […]
What is a Breakeven Analysis?
A Breakeven Analysis is one of the most common ways to assess a business decision. In its most simplistic form, a breakeven analysis looks at how many units of a product or service must be sold in order for total revenues to equal the cost of production. A breakeven analysis is commonly used in financial […]
Can a Company Really Have a Negative EPS?
At the end of the day, the goal for every company is to make money, and an incredibly popular metric to track this is known as Earnings per Share, or EPS, but is it possible for a company to have Negative EPS? Key Takeaways • Earnings per Share, or EPS, is a popular investing metric […]
Understanding Run Rate and Applying it to Your Stock Investing Strategy
The term “Run Rate” is one that you quite possibly might have heard before, but many people do not know what it means. It is a term that frequently is said on shows like Shark Tank but also oftentimes used in the business world. Essentially, run rate means that you’re taking the current market conditions […]
