Having a good understanding of financial statistics is crucial for making informed investment decisions. This page provides an overview of the most important financial indicators and their impact on stock prices. By analyzing these statistics, you can gain valuable insights into the performance of different stocks and make more informed choices about your investments.
- Earnings Per Share (EPS):
EPS is the portion of a company's profit allocated to each outstanding share of stock.
Example: If a company earns $1 million in net income and has 500,000 shares outstanding, its EPS is $2 ($1,000,000 / 500,000 shares = $2). - Price-to-Earnings Ratio (P/E):
The P/E ratio compares a company's stock price to its earnings per share.
Example: If a company's stock is trading at $50 and its EPS is $5, its P/E ratio is 10 ($50 / $5 = 10), meaning investors are willing to pay 10 times the company's earnings for each share. - Analyst Recommendations (ANR):
ANR indicates analysts' views on whether to buy, hold, or sell a stock.
Example: If 10 analysts cover a stock and 7 recommend a "buy," 2 recommend "hold," and 1 recommends "sell," the consensus ANR would lean toward a "buy." - Company Beta:
Beta measures a stock's volatility compared to the market.
Example: If a stock has a beta of 1.5, it is 50% more volatile than the overall market. So, if the market increases by 10%, this stock is expected to increase by 15%. - Capital Asset Pricing Model (CAPM):
CAPM calculates the expected return on an investment based on its risk.
Example: If the risk-free rate is 2%, the market return is 8%, and a stock has a beta of 1.2, the expected return is:
Expected Return = 2% + 1.2 × (8% - 2%) = 9.2%.