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Fundamental Analysis & Valuation

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Fundamental Analysis & Valuation

PEG Ratio

The price-to-earnings ratio divided by the expected annual earnings growth rate, used to judge whether growth justifies the multiple.

PEG = Price-to-Earnings Ratio / Expected Annual Earnings Growth Rate (in percent) ratio (x, times) Fundamental Analysis & Valuation

Piotroski F-Score

A nine-point checklist of year-on-year improvements in profitability, leverage and efficiency, scoring financial strength from 0 to 9.

F-Score = sum of nine binary tests across profitability (4), leverage and liquidity (3), and operating efficiency (2) ratio (x, times) Fundamental Analysis & Valuation

Price-to-Book Ratio

The market price of a share divided by its book value per share.

P/B = Market Price per Share / Book Value per Share ratio (x, times) Fundamental Analysis & Valuation

Price-to-Cash-Flow Ratio

Market capitalisation divided by operating cash flow, valuing the company against cash generated rather than accounting profit.

P/CF = Market Capitalisation / Operating Cash Flow ratio (x, times) Fundamental Analysis & Valuation

Price-to-Earnings Ratio

The price of one share divided by the earnings attributable to it, showing how many rupees are paid per rupee of annual profit.

P/E = Market Price per Share / Earnings per Share ratio (x, times) Fundamental Analysis & Valuation

Price-to-Sales Ratio

Market capitalisation divided by annual revenue, showing how much is paid per rupee of sales.

P/S = Market Capitalisation / Annual Revenue ratio (x, times) Fundamental Analysis & Valuation

Pricing Power

The ability to raise prices without losing enough volume to reduce profit.

Test: gross margin is stable or rising through a period of input-cost inflation, with volumes broadly maintained qualitative