Fundamental Analysis Metrics Table for Stock Evaluation

Fundamental analysis is a method of evaluating a stock by analyzing various financial and economic factors that could affect its intrinsic value. Investors use fundamental analysis to make informed decisions about whether a stock is overvalued or undervalued. Here’s a simple explanation of each metric along with an example:

Market Valuation:
- Market Capitalization: The total market value of a company’s outstanding shares of stock. It is calculated by multiplying the current stock price by the total number of outstanding shares.
  - Example: If a company has 1 million shares outstanding, and the current stock price is $50, the market capitalization would be $50 million.
- Price-to-Earnings Ratio (P/E): The ratio of a company’s stock price to its earnings per share (EPS). It provides an indication of how much investors are willing to pay for each dollar of earnings.
  - Example: If a stock is trading at $100 and has an EPS of $5, the P/E ratio is 20 (=$100/$5).
- Price-to-Book Ratio (P/B): Compares a company’s market value to its book value (total assets minus total liabilities).
  - Example: If a company has a market capitalization of $200 million and a book value of $100 million, the P/B ratio is 2 (=$200 million/$100 million).
Financial Performance:
- Revenue Growth: The percentage increase in a company’s revenue over a specific period.
  - Example: If a company’s revenue was $100 million last year and $120 million this year, the revenue growth rate is 20%.
- Profit Margin: The percentage of revenue that turns into profit after expenses.
  - Example: If a company has a net profit of $10 million and revenue of $50 million, the profit margin is 20% (=$10 million/$50 million).
- Return on Equity (ROE): Measures a company’s profitability by calculating how much profit it generates with shareholders’ equity.
  - Example: If a company has a net income of $15 million and shareholders’ equity of $100 million, the ROE is 15% (=$15 million/$100 million).
Debt and Solvency:
- Debt-to-Equity Ratio: Compares a company’s total debt to its shareholders’ equity.
  - Example: If a company has $50 million in debt and $100 million in equity, the debt-to-equity ratio is 0.5 (=$50 million/$100 million).
- Interest Coverage Ratio: Measures a company’s ability to cover its interest expenses with its earnings.
  - Example: If a company has $20 million in earnings before interest and taxes (EBIT) and $5 million in interest expenses, the interest coverage ratio is 4 (=$20 million/$5 million).
Dividend Yield:
- Dividend Yield: The annual dividend income expressed as a percentage of the stock’s current price.
  - Example: If a stock pays an annual dividend of $2 per share and the stock price is $50, the dividend yield is 4% (=$2/$50).

Here’s a table summarizing the metrics:

Metric	Formula	Example
Market Valuation
Market Capitalization	Stock Price x Outstanding Shares	$50 x 1 million = $50 million
Price-to-Earnings Ratio (P/E)	Stock Price / Earnings per Share (EPS)	$100 / $5 = 20
Price-to-Book Ratio (P/B)	Market Cap / Book Value	$200 million / $100 million = 2
Financial Performance
Revenue Growth	[(Current Revenue – Last Year’s Revenue) / Last Year’s Revenue] x 100	[(120 – 100) / 100] x 100 = 20%
Profit Margin	(Net Profit / Revenue) x 100	($10 million / $50 million) x 100 = 20%
Return on Equity (ROE)	Net Income / Shareholders’ Equity	$15 million / $100 million = 15%
Debt and Solvency
Debt-to-Equity Ratio	Total Debt / Shareholders’ Equity	$50 million / $100 million = 0.5
Interest Coverage Ratio	EBIT / Interest Expenses	$20 million / $5 million = 4
Dividend Yield
Dividend Yield	(Annual Dividend per Share / Stock Price) x 100	($2 / $50) x 100 = 4%