EPS = net income/Outstanding common shares.
in case the company has preferred stocks, you simply subtract the dividends on the preferred stocks from net income than divide by number of outstanding common shares.
Tip: to find the figure for shares outstanding you can look at the most recent 10Q of any company which is found through the SEC website. It is usually found on the first page.
EPS = (net income – dividends paid on preferred shares)/Outstanding common shares.
– P/E (Price to earnings ratio) this is perhaps the most popular ratio of all with EPS, the price to earnings ratio is used to gauge whether a company’s stock price is considered overvalued or cheap enough to make a good investment. However in order to determine which it is you would have to compare the company’s PE ratio to its competition in order to determine whether it is overpriced or not.
In order to calculate the PE ratio we must have the EPS figure.
PE = Price per share/EPS earnings per share
in essence, this is how much you are willing to pay for every dollar the company earns.
if company DNA is trading a $12 a share with $6 in earnings per share (EPS) than the broad market is paying $2 per $1 that the company earns. $12/$6 = PE of 2
– Beta = relative movement of the stock in comparison to a major index (SP500) or for better terms, its the comparison of a securities volatility with the market. a beta of 1 would indicate that a security is 100% as volatile as the market, a beta of 1.5 would indicate a 50% more volatility.
Beta can be a negative number, when beta is negative it only implies that a security moves in an inverse affect to the market.
– ROA (return on assets)
– ROE (return on equity)
– ROI (return on investment)