Learn the essential numbers and ratios to evaluate a company before you invest. P/E, EPS, market cap, and more – explained simply.
Before you buy a stock, you need to understand the company behind it. Fundamental analysis uses key metrics to determine whether a stock is undervalued, overvalued, or fairly priced. Here are the most important ones for beginners.
Price per share ÷ Earnings per share. Tells you how much you're paying for each dollar of earnings. Lower P/E may indicate undervaluation (but compare with industry).
Company's profit divided by outstanding shares. Growing EPS is a sign of health.
Total value of all shares. Classifies companies as large‑cap (>$10B), mid‑cap ($2B‑$10B), or small‑cap (<$2B).
Annual dividend ÷ share price. Indicates how much cash flow you get per dollar invested.
Price per share ÷ book value per share. Compares market value to accounting value. Useful for banks and asset‑heavy companies.
Total liabilities ÷ shareholders' equity. High debt can be risky.
Yahoo Finance, Google Finance, Morningstar, company investor relations pages.
Many brokers provide free research reports (e.g., Fidelity, Schwab).
Enter a few key metrics to get a simple buy/hold/sell signal. This is a simplified educational tool – always do your own research.
This tool uses simplified rules. Real research involves industry comparison, management quality, and more.