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What is EPS (earnings per share)?
A company’s earnings are the reason for its existence, and is defined as the revenue minus the cost of sales, operating expenses, and taxes. In simpler terms it’s how much profit the company made. As...
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How to use PE ratios for stock evaluation
In a previous article, we explored earnings, why they’re important to us as investors, and learned how to calculate EPS (earnings per share). In summary, EPS is simply a way to express a company’s...
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What is the difference between Price and Value?
One of the most important concepts to grasp as a value investor is one that is perhaps not that intuitive to everyone. That concept is that the price of a stock and the value of a stock are two...
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How to estimate future EPS growth rates
One of the most important factors that affects a company’s share price is the expected growth rate of the EPS (earnings per share). It logically follows then, that value investors would factor this...
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How to estimate future PE ratios
Much the same as future EPS growth, estimation of future PE ratios is an important skill to have in place as a value investor. A company’s price to earnings ratio (PE) is a relative measure of how...
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How Stock Fundamentals are Derived from Company Financials Part 1: Balance Sheet
Value investors are very interested in the fundamentals of the companies they invest in, particularly historical data over the past 5 – 10 years. These days it’s easy to go to any of dozens of websites...
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How Stock Fundamentals are Derived from Company Financials Part 2: Income...
In the first installment of this series, we looked at a company’s balance sheet to learn how to derive a number of useful fundamental ratios and metrics about the company. Since balance sheets are...
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How to Calculate WACC
Weighted Average Cost of Capital (WACC) is defined as the minimum return that a company must generate to satisfy its owners, creditors, and other providers of capital or else it would make more sense...
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How Stock Fundamentals are Derived from Company Financials Part 3: Cash Flow...
This is the third and final installment of my series which looks at how company fundamentals are derived from the financial statements they’re based on. Previously we looked at the balance sheet and...
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The Structural Flaw in Data-Driven Quantitative Analysis
This guest post was written by “The Archivist”, of The Market Archive. People who lean more towards fundamental analysis tend to think differently than others using alternate methods. There is a...
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