Ratios

Earnings per Share (EPS)

EPS is useful for assessing a single company's growth by comparing how EPS changes over time.

Since P/E Ratio is dependent on the price of the stock, it fluctuates constantly. EPS on the other hand, only fluctuates when the earnings fluctuate.

P/E Ratio

The P/E ratio value gives an indication of how investors feel about future growth. The higher it is, the more investors are anticipating from future earnings.

P/E Ratio is a means of assessing the value of a stock. Ostensibly, the higher the P/E ratio, the more overpriced it is.

P/E answers the question, "how many years does this company have to sustain current earnings in order to make enough money to pay back the current share price"

• it can also be thought of as, "an investor investing in a company with a P/E ratio of 20 signifies that the investor is willing to pay $20 for $1 of current earnings".

P/E ratios are only valuable as a tool when used against companies with some similarity. Comparing the P/E ratios of a tech company with a real estate company does not yield much useful information. This is due to the fact that a tech company has higher propsects for growth and has higher profit margins.

Debt to Equity

Return on Equity (RoE)

Return on equity (ROE) is a measure, expressed as a percentage, of how much profit a company generates with the money shareholders have invested.

The measure of ROE indicates how well the company is doing in terms of the invested capital. Put another way, how well a company utilizes capital from shareholders.