Company Analysis & Valuation

A valuation metric that compares a company’s share price to its earnings per share, calculated as price per share divided by earnings per share. It tells you how much investors are willing to pay for each dollar of a company’s earnings, serving as a gauge of whether a stock is relatively expensive or cheap. A high P/E can signal strong growth expectations or an overvalued stock, while a low one may indicate a bargain or underlying problems, so it’s most useful compared against peers or the company’s own history.

A company’s profit divided by its number of outstanding shares, showing how much profit is attributed to each share of stock. It’s a core measure of profitability, calculated as net income minus preferred dividends, divided by outstanding shares. A rising EPS generally signals improving profitability, and it’s a key input in other metrics like the price-to-earnings (P/E) ratio.

A version of earnings per share that accounts for all potential shares that could exist if convertible securities, such as stock options, warrants, and convertible bonds, were exercised. Because it assumes the maximum possible share count, it produces a lower, more conservative figure than basic EPS. Investors watch it because it shows the worst-case impact on their ownership stake if those additional shares were actually issued.

The average rate a company expects to pay to finance its operations, blending the cost of both equity and debt in proportion to how much of each it uses. It represents the minimum return a company must earn on its investments to satisfy its shareholders and lenders. Companies use it as a hurdle rate for evaluating projects, and investors use it to help gauge whether an investment is worth the risk.

The additional revenue a company earns from selling one more unit of a product or service, calculated as the change in total revenue divided by the change in quantity sold. Businesses use it to find their optimal production level, since profit is maximized where marginal revenue equals marginal cost. In competitive markets it often equals the price per unit, while for larger firms it typically declines as more units are sold.

A bullish chart pattern in technical analysis that signals a potential continuation of an upward trend. It forms in two parts: a rounded “cup” shaped like a U as the price dips and recovers, followed by a smaller “handle,” a slight downward drift or consolidation. Traders often watch for the price to break above the handle’s resistance level as a buy signal, with the cup’s depth used to estimate a price target.