Metrics Glossary
21 metrics, grouped by topic. Each one can become a scoring rule with a threshold of your own in StockScorer.
Valuation
| Metric | Definition | Used in strategies |
|---|---|---|
| P/E | The price-earnings ratio (P/E) relates a stock's current price to its earnings per share. |
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| EV/EBIT | EV/EBIT relates enterprise value (company value including debt, minus cash) to operating profit (EBIT). |
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| EV/EBITDA | EV/EBITDA relates enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization). |
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| P/B | The price-to-book ratio (P/B) relates a stock's price to its book value per share. |
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| PEG ratio | The PEG ratio (Price/Earnings-to-Growth) relates the P/E ratio to expected earnings growth. |
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Returns on capital
| Metric | Definition | Used in strategies |
|---|---|---|
| ROE | Return on equity (ROE) measures how much profit a company generates relative to its equity. |
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| ROA | Return on assets (ROA) measures how much profit a company generates relative to its total balance sheet, regardless of whether the capital comes from equity or debt. |
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| ROC | Return on capital (ROC) as defined by Joel Greenblatt shows how much operating profit a company generates from the capital actually tied up in its day-to-day business. |
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Margins
| Metric | Definition | Used in strategies |
|---|---|---|
| Gross margin | Gross margin relates gross profit (revenue minus direct cost of goods sold) to revenue. |
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| EBITDA margin | EBITDA margin relates earnings before interest, taxes, depreciation and amortization (EBITDA) to revenue. |
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| EBIT margin | EBIT margin (operating margin) relates operating profit (EBIT) to revenue. |
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| Net margin | Return on sales (also net margin) relates net income to revenue. |
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Cash flow, earnings and growth
| Metric | Definition | Used in strategies |
|---|---|---|
| Free cash flow | Free cash flow (FCF) shows how much money is actually left over for a company after investing in its operating business: money available for dividends, debt reduction or buybacks. |
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| EPS | Earnings per share (EPS) allocates a company's net income across each share outstanding. |
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| Revenue growth | Revenue growth shows how much a company's sales have increased compared to the prior year. |
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Debt and liquidity
| Metric | Definition | Used in strategies |
|---|---|---|
| Net debt/EBITDA | The ratio of net debt to EBITDA shows how many years a company would need to repay its debt purely from operating earnings (EBITDA), one of the central metrics for assessing leverage. |
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| Debt-to-equity | The debt-to-equity ratio (D/E) relates a company's total debt to its equity. |
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| Equity ratio | The equity ratio shows what share of total assets is financed by equity rather than debt. |
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| Current ratio | The current ratio relates current assets to current liabilities. |
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Payout
| Metric | Definition | Used in strategies |
|---|---|---|
| Dividend yield | Dividend yield shows what percentage of a stock's current price a company pays out annually as dividends. |
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| Payout ratio | The payout ratio shows what share of net income is paid out to shareholders as dividends. |
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