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 […]

4 Types of Company Growth Rates and How to Calculate Them

Investors demand growth from companies. Wall Street loves growth. But how is company growth defined exactly? In this post we’ll examine 4 separate types of company growth rates, and when they are used depending on the type of company. First, let’s start with the bottom line, or Earnings Per Share. 1—Earnings Per Share Growth Earnings […]

Why Do Companies Repurchase Shares? To Create Value.

Some of the greatest CEOs of all-time used lots of share buybacks to create outstanding returns. In many cases, these share repurchases can be fantastic for investors. They work as a savings vehicle, and they spurn growth in share value. But they don’t come without their risks. In this post, we will discuss the pros […]

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