Here are four essential ratios for analysing companies

Long_Equity
09-20

Here are four essential ratios for analysing companies: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$ $NASDAQ 100(NDX)$ $E-mini Nasdaq 100 - main 2412(NQmain)$ $Invesco QQQ(QQQ)$ $DJIA(.DJI)$ $GLOBAL X DOW 30® COVERED CALL ETF(DJIA)$

1. Growth. Consider both revenue and free cash flow. Consider both the short term and long term. Look for consistency. Consider the impact of buybacks on per share growth metrics.

2. Margins. Look for margins that are widening over time, allowing FCF growth to outpace revenue growth. Consider each expense separately (e.g. COGS, R&D, CAPEX).

3. Return on capital. Look for a consistently high number and a low payout ratio. Consider the company’s debt level and interest expense.

4. FCF yield. Consider whether the growth rate justifies the valuation. Be mindful of stock-based compensation.

Reduction in outstanding shares (Share buyback). I’ve tried to cover that under growth, as it impacts growth when measured on a per share basis. But also worth considering as part of capital allocation.

What would you add?

https://x.com/long_equity/status/1836855705988649264

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  • jislandfund
    ·09-20
    how do you think going cashless will effect business desicions?
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