Fundamental analysis articles
Is Price to Earnings useful?
In this article we discuss:
- What is Price to Earnings (P/E) ratio?
- How is P/E calculated?
- What does it mean?
- What is trailing Price to Earnings? What is forward Price to Earnings?
- What is P/E used for?
- What is the Earnings Yield ratio?
- Price to Earnings pros
- P/E cons
- Key takeaways (TL;DR)
Market crashes explained
Why market crashes occur? Can a market crash be rational? What’s the take of behavioral finance on market crashes? In this fundamental analysis article we cover several factors that help fuel them, how do they end, and most importantly, how to deal with a market crash.
Highest scoring stocks
Read this article for insights on:
- What are stock scoring systems.
- How a stock scoring system is built.
- Challenges of stock scores (metrics relevancy, transparency, weighted biases, time horizon, inputs needed).
- Stock scoring pros.
- Stock scoring cons.
How to build your own dividend policy - With any single stock
Are you looking for high dividend-paying stocks? This article will help you broaden your options. We’ll cover how to build your own dividend policy, and tax considerations when comparing against repurchases.
Learn why dividend payments are neutral, but can work as a signal of management confidence in future prospects.
How to build your own dividend policy - With any single stock.
Is Price to Book Value obsolete?
Our review for this financial metric:
- What is price to book value (PBV), and how to calculate it.
- Its relation with Price to Tangible Book Value.
- The meaning of PBV, and factors that account for different results.
- Pros and cons of Price to Book Value for stock valuation.
Is Price to Book Value obsolete?.
Discounted Cash Flow model: pros and cons
The Discounted Cash Flow model is widely used in due diligence processes for equity valuation. In this article, we cover the concepts and theory behind the Discounted Cash Flow model. What is it used for, what does DCF mean, and how it relates to the Dividend Discount model.
We also discuss how to calculate a Discounted Cash Flow, and the assumptions needed (estimation of cash flows, time horizon, growth rates, weighted average cost of capital, and terminal value).
Finally, the many adversities this sound theory meets in practice that make many investors resort to other metrics to assess true value.
Discounted Cash Flow model: pros and cons.
What is Price to Sales ratio?
Review this article to dig deeper into:
- What is Price to Sales ratio?.
- How is P/S calculated?.
- What does it mean?.
- What is Price to Sales used for?.
- Price to Sales ratio and financial position.
- Pros of Price to Sales.
- Cons of P/S ratio.
Price to Sales ratio explained.
A take on diversifying
It’s widely spread that investors should diversify. This article might light the path to follow, by analyzing common questions like:
- Is diversification necessary?
- Arguments for and against it.
- Diversification and margin of safety.
- Who diversifies? Who doesn’t?
- How many stocks should you own?
- Key takeaways (TL;DR)
The importance of capital allocation
We review why companies need to be smart about capital allocation:
- What is capital allocation?
- Capital allocation alternatives
- Why is capital allocation important?
- Cash hoarding and capital allocation
- Key takeaways (TL;DR)
The importance of capital allocation.