Investing Ratios You Need To Know for valuing a company.

Discussion in 'Trading' started by Lloyd W. Coutee, Oct 13, 2015.

  1. Earnings Per Share, Price To Earnings Ratio, Price to Sales Ratio.
    Which would you add and why?
     
  2. rmorse

    rmorse Sponsor

    Perception. All of the metrics you can think of have more or less weight from day to day, but IMO stock prices trade based on the perception of future value. If any one metric or combination were that important, share prices would not vary so much from day to day as little new information is available daily.

    Bob
     
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  3. neke

    neke

    For the long term, you need more than perception

    Here are some more: PE to growth (historical), cash per share, tangible book / share. Of course these do not change on a day to day basis, but if something is happening to the stock or to the market (say sell-off), they are useful for making judgement on where support might be found - surprise, that is not chart :). You wouldn't expect a solid company to behave the way a zero-earnings futuristic company will do.
     
  4. ktm

    ktm

    I would include the "actual earnings and cash on hand" to the "made up earnings and cash they wish they had but reported on their balance sheet" ratio.

    That's clearly a key metric to determine the long term direction of the stock.
     
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