Cheatsheet of commonly used metrics related to stocks financial analysis
P/E
Price to Earnings ratio = Stock Price ÷ EPS
How much investors are willing to pay for each dollar a company earns
Trailing P/E
Uses actual earnings from the past 12 months
Forward P/E
Uses analysts’ earnings forecasts for the coming year (more speculative)
EPS
Earnings Per Share = Net Profit ÷ Outstanding Shares
How much money a company makes for each share of its stock
PEG
P/E to Growth ratio = P/E ÷ Annual EPS Growth Rate
Provides context for a valuation, better for comparing companies with different growth rates
Generally, a PEG below 1.0 suggests a stock may be undervalued, while anything above 2.0 might indicate overvaluation.