Valuation Metrics

The net tangible worth of a company per share, calculated as (total assets minus intangible assets minus total liabilities minus preferred stock par value) divided by common shares outstanding. Uses tangible assets only, excluding goodwill and other intangibles. Also called net tangible worth per share. Commonly used in the price-to-book (P/B) ratio to assess whether a stock is overvalued or undervalued relative to its tangible accounting value.

Example: A company with $500 million in total assets (including $50 million in intangibles), $200 million in ...

The annual dividend income expressed as a percentage of the current stock price, calculated as (Annual Dividend per Share ÷ Current Stock Price) × 100. A 5% dividend yield means an investor receives $5 annually for every $100 invested. Higher yields may indicate value or increased risk from price declines.

Example: A stock trading at $50 per share pays $2.50 in annual dividends, resulting in a 5% dividend yield ($...

The portion of a company's net income, after subtracting preferred dividends, allocated to each outstanding share of common stock, calculated as (Net Income - Preferred Dividends) ÷ Common Shares Outstanding. EPS is the fundamental per-share profitability metric used in valuation ratios like P/E ratio and fundamental analysis. Companies report both basic EPS (using actual shares outstanding) and diluted EPS (including potential shares from options, warrants, and convertible securities).

Example: ABC Corporation reports $10 million in net income for the year with 5 million shares outstanding. Ba...

The total market value of all outstanding shares of a company, calculated by multiplying the current share price by shares outstanding. Classification by size: Large-cap (over $10 billion), Mid-cap ($2-10 billion), Small-cap ($300 million to $2 billion), Micro-cap (under $300 million). Used extensively in portfolio construction and index weighting.

Example: A company with 50 million shares outstanding trading at $80 per share has a market capitalization of...

A valuation metric comparing a stock's market price per share to its book value per share, calculated as Market Price ÷ Book Value per Share. Ratios below 1.0 may indicate undervaluation or financial distress, while higher ratios suggest investors expect growth or premium assets. Commonly used for evaluating financial institutions and asset-heavy companies.

Example: A bank stock trading at $40 per share with a book value of $50 per share has a P/B ratio of 0.80, su...

A valuation metric calculated as current stock price divided by earnings per share (EPS). High P/E ratios may indicate growth expectations or overvaluation, while low P/E ratios may suggest undervaluation or investor concerns. Used to compare relative valuations across companies and sectors.

Example: A stock trading at $80 per share with annual EPS of $4 has a P/E ratio of 20 ($80 ÷ $4). This means ...