20 Key Financial Ratios - InvestingAnswers Using the P E ratio alone, the stock was considered overvalued, but by using the PEG ratio to account for EPS growth, the stock is actually undervalued 13) Price-to-Sales (P S) Ratio The price-to-sales ratio is an important stock ratio that measures a company’s share price in relation to its sales per share This is the price investors must
Discounted Cash Flow (DCF) Analysis - InvestingAnswers To determine a fair value estimate for a stock, first project the amount of operating cash flow the company is likely to produce in the years ahead Most people estimate the cash flows for five or ten years in the future because it is nearly impossible to make a realistic estimate of cash flows for any lengthier amount of time
Financial Statement Analysis for Beginners - InvestingAnswers Financial statement analysis is the process of evaluating a company’s financial information in order to make informed economic decisions It involves the review and analysis of income statements, balance sheets, cash flow statements, statements of shareholders’ equity, and any other relevant financial statements
Fundamental Analysis Definition Example - InvestingAnswers How does Fundamental Analysis work? Fundamental analysis observes numerous elements that affect stock prices such as sales, price to earnings (P E) ratio, profits, earnings per share (EPS), as well as macroeconomic and industry specific factors Fundamental analysts use either top-down or bottom-up methods of analysis, or sometimes both
OBV -- On Balance Volume -- Definition Example - InvestingAnswers Designed in the early 1960s before computers were used in stock analysis, the OBV calculation is rather simple An arbitrary number is used to begin an OBV line On days when a stock's price closes higher, all the volume of that day is added to this line On days when it closes lower, the volume is subtracted from the line
Swing Trading Tips You Can’t Afford to Miss | InvestingAnswers When possible, incorporating “Price Relative” to the S P 500 into your chart analysis should tell you how the individual stock is performing in relation to the overall market During bear markets, seek out stocks whose relative strength line is trending downward in relation to the S P Do the opposite during bull markets 3 Trade in Harmony
Standard Deviation Definition Example - InvestingAnswers Using the same process, we can calculate that the standard deviation for the less volatile Company ABC stock is a much lower 0 0129 or 1 29% This means that for XYZ, the return is expected to be 10%, but 68% of the time it could be as much as 30% or as little as -10%
Technical Analysis: The Complex Head-and-Shoulders Pattern In Edwards and Magee's Technical Analysis of Stock Trends-- a book many consider the bible of technical analysis-- the authors document several variations of the garden-variety head and shoulders patterns These mutations include patterns with two left shoulders and one right, two right shoulders and two left and even multiple heads
Beta Definition Example - InvestingAnswers For example, a stock with a beta of 2 0 is usually twice as volatile as the broader market If the S P 500 were to fall by -10% next year, then the stock would be expected to fall about -20% (assuming that the stock behaves similar to how it has in the past) The stock would also be expected to gain more in an up market
Principles of Technical Analysis: The Cup-and-Handle Pattern On a stock chart, the cup appears as 'U' shape The handle appears as if it had the shape of a backslash symbol or '\' The cup and handle is a bullish continuation pattern It is marked by a consolidation, followed by a breakout Once the pattern is complete, the stock should continue to trade upward, in the direction it was previously heading