Financial Ratios: P/E Ratio, PEG Ratio, P/B Ratio
A treasure trove of fundamental info.
© Dougal Waters—Stone/Getty Images
You’re eyeing a stock that trades at $250. Is that an attractive price? It’s hard to tell by just looking at the quote. That’s where financial ratios—the stock’s price relative to company earnings, cash flow, book value, and more—come in handy.
On the surface, a stock’s price is just a number. But behind that price may be several shiny nuggets that can help you unearth some useful information:
- Is the stock trading at a premium or discount (i.e., is it a bargain)?
- How did the market come up with that price?
- What are the growth prospects for the company?
Stock performance measures: A look at ratios
Analysts apply several valuation tools, some of which can…
