Fundamental analysis: related pages

Growth investing

An investment style that emphasises future growth rather than the value of the existing profits and cash flows.

Value investing

A style of investing based on picking shares that have low valuations relative to their current profits, cash flows and dividend yield.

Value effect

The tendency of value stocks to outperform.

Earnings yield

EPS ÷ share price.

PE ratio

Share price divided by earnings per share.

Historical PE

A PE ratio based on published accounts rather than forecast data.

Prospective PE

Share price ÷ forecast EPS for the current financial year.

Relative PE

A company's PE ratio divided by the sector PE or the market PE.

EV/EBITDA

Enterprise value divided by earnings before interest tax depreciation and amortisation.

EV/sales

Enterprise value ÷ sales.

Price/cashflow

Share price ÷ (cash flow ÷ no of shares in issue).

Price/sales

market cap ÷ sales.

NAV

The total value of a company’s assets less the total value of its liabilities, divided by the number of shares in issue.

Sum of parts valuation

The valuation of a company by separately valuing different parts of it so different valuation methods or ratios can be applied to disparate businesses.

DCF valuation

The calculation of the present value of a stream of future cash flows taking into account both risk and the time expected to elapse before the cash is received.

Valuation ratios

A measure of how expensive a share is obtained by dividing a measure of cost against a measure of value or profits.