Value Investing

What Are Common Value Investing Metrics?

Along with analyzing a company’s price-to-earnings ratio, which can illustrate how expensive a company is in relation to its earnings, common metrics include the price-to-book ratio, which compares a company’s share price to its book value (P/BV) per share.

Importantly, this highlights the difference between a company’s book value and its market value. A B/V of 1 would indicate that a company’s market value is trading at its book value. Free cash flow (FCF) is another, which shows the cash that a company has on hand after expenses and capital expenditures are accounted for. Finally, the debt-to-equity ratio (D/E) looks at the extent to which a company’s assets are financed by debt. 

Leave a Reply

Your email address will not be published. Required fields are marked *