Dvidend Yield
Shows how much a company
payout in dividends each year relative to its share price. In
the
absence if any capital gains, the dividend yield is the return
on investment for a stock.
Price per Shares
High dividend yielding stocks are preferable for long term
investors as they can accumulate
dividend payouts on top of the gains from the share price
performance.
Earnings Per Share (EPS)
The portion of a company’s
profit allocated to each outstanding share of common stock.
EPS
serves as an indicator of a company’s profitability.
EPS = Net Income
No of Share Outstanding
It is more accurate to use a weighted average no. of shares
outstanding over the reporting period,
because no. of shares outstanding can change over time.
Meanwhile, diluted EPS expands on
basic EPS by including the shares of convertibles or warrants
outstanding in the outstanding share
numbers. The company that is more efficient of using its capital
to generate income would be a
better company. Investor should invest in stocks that offer
positive EPS and/or higher EPS.
#
Earnings manipulation will affect the quality of earnings
number.
Price-Earning Ratio (P/E Ratio) = Market Value per
Shares
Earning per Shares(EPS)
P/E Ratio is a valuation of a
company’s current share price compared to its per-share
earnings.
High P/E suggests that investors are expecting higher earnings
growth in the future compared to
companies with lower P/E. It is most useful to compare P/E
ratios of one company to other
companies in the same industry – i.e. peer comparison, to the
market in general or against the
company’s own historical P/E.
P/E can be consoidered an important ratio because it gives us a
quick idea of how many timesthe price is multiple of the earning. For example,if
the price of stocks is RM10 and tee EPS is 0.50, the P/E is 20 (10 /
0.50)
Please note,if the stocks have passed the tests of of EPS growth rate and Dividen Yield, the lower the P/E,the better the stocks.So,go for the lowest P/E
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