Stock Analysis Summary
This summary provides a quick reference for the various financial ratios used in stock analysis, including what values to look for when identifying potential investment opportunities.
| Ratio | Recommended Value | Comparison |
|---|---|---|
| Price to Earnings (P/E) | Lower the better | Lower than the industry average |
| Price to Cash Flow | Lower the better | Lower than the industry average |
| Price to Sales (P/S) | Lower the better | Lower than the industry average |
| Net Profit Margin | Higher the better | Higher than the industry average |
| Return on Investment (ROI) | Higher the better | Higher than the industry average |
| Return on Equity (ROE) | Slightly higher | Equal or slightly higher than industry average |
| Earnings Per Share (EPS) | Higher the better | Higher than the industry average |
| Sales Growth Rate | Higher the better | Higher than the industry average |
| Current Ratio | Slightly higher (1.5 - 2.0) | Equal or slightly higher than industry average |
| Quick Ratio | Near to 1 | - |
| Debt to Equity Ratio | Lower the better | Lower than the industry average |
| Book Value | Higher the better | Difficult to compare directly |
| Book Value Per Share | Stock Price < BVPS | Higher than the industry average |
| Price to Book Value | Less than 1 | Lower the better |
Conclusion
Financial ratio analysis helps evaluate the economic status of companies. Remember that economic conditions affect stock prices, so use these ratios as tools, not absolute rules. Always use multiple ratios in conjunction with qualitative analysis.