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Course · 14 lessons
Valuation 101
How the market prices a stock — every multiple, what it means, and when to use it.
Market Capitalization
The total dollar value of a company's outstanding shares — share price times shares outstanding.
Enterprise Value
The total value of a business — market cap plus debt minus cash — i.e. what it would cost to buy it outright.
Price-to-Earnings (P/E) Ratio
How many dollars investors pay for each dollar of a company's annual earnings.
Forward P/E Ratio
The P/E ratio using estimated future earnings instead of past earnings.
Earnings Yield
A company's earnings per share as a percentage of its share price, the inverse of P/E.
PEG Ratio
The P/E ratio divided by the earnings growth rate, to judge value against growth.
Price-to-Book Ratio
How the stock price compares to the company's net accounting value per share.
Price-to-Sales Ratio
How many dollars investors pay for each dollar of a company's annual revenue.
EV / EBITDA
A company's total value compared to its earnings before interest, taxes, depreciation, and amortization.
EV / EBIT
Enterprise value divided by operating profit — a debt-aware way to compare how expensive companies are.
EV / Sales
A company's total value, including debt, compared to its annual revenue.
Price-to-Free-Cash-Flow
How many dollars investors pay for each dollar of cash a company generates after capital spending.
Free Cash Flow Yield
A company's free cash flow as a percentage of its market value, the inverse of P/FCF.
Dividend Yield
The annual dividend paid per share as a percentage of the current share price.