Get started

Peratio

LULU, a stock to watch!Lululemon stock (LULU) has traded down into the $230's for the first time since the COVID-19 Crash of 2020. I believe that LULU is a stock to keep your eye on, for a few reasons. - The stock is trading at a 20x p/e whereas its historical p/e is in the mid 40's. - Margins for the company have all been steady, and remain an industry leader. - Lululemon is still set to see 10% CAGR for EPS in the next 5 years. (consensus) - The stock is seeing a severe correction, on par with its past decade corrections. Above is bullish sentiment on LULU, and can be considered the "bull/base case" Personally, I have not turned bullish on LULU yet, but with the levels it is reaching it has most certainly caught my eye and has been added to my watch list. While the stock is seeing oversold levels, I think the midterm outlook can still remain bearish for Lululemon. Below are reasons why the short/midterm outlook for LULU may not be optimal. - Weaker forward projections compared to last 5 years. Though LULU is expecting 10% CAGR EPS for the next 5 years, that is just a fraction of its last 5 year CAGR of 38.55%. While projections are still positive, they have certainly dampened compared to recent years' growth. - Macroeconomic environment. Though the economy remains hot/fine for now, there have been warning signs flashing of a rising unemployment figure across the country. With suboptimal economic conditions, the average consumer may cut down on expensive Lululemon clothing. These Macro conditions may also continue to dampen the economy, which can cause an overall market correction, where LULU would likely follow the sentiment. Overall, I believe that LULU offers significant reward, but the shorter term horizon is still worrisome for Lululemon and the global economy. Lululemon is a leader in the Retail Trade sector and dominates when it comes to profitability. The stock is definitely one to keep an eye on if it continues to get crushed. Regarding technicals, I am watching this demand zone around the 200 level. The stock could trend down to this area, and reach close to COVID-19 lows if sentiment does not change. This area could also offer significant R/R for an entry point. Disclosure: I currently hold no position in LULU stock, and have never been a shareholder.
NASDAQ:LULU
by ZachSap
Innovation boosts P/E ratios - P/E ration evolvesTechnological Innovation is Compounding Technological progress has huge impact on the P/E ratios of companies and the S&P 500. Technologically advanced companies naturally have a higher P/E as it's expected from them to have better future earnings. One of the ways better future earnings happen is through efficiency leaps. These efficiency leaps are important to businesses' margins but it all comes down to: better tech = more efficiency = lower costs = higher earnings = higher P/E These innovation cycles bring efficiency leaps that are linked to P/E ratio waves. We can observe in this chart that the P/E ratio has cycles that coincide with innovation cycles. There were, of course, macroeconomic factors and wars that impacted the P/E, but high P/E can be explained by innovation cycles. We can also see that each innovation cycle will have higher P/E ratios than the previous. By looking at this chart, it feels that the P/E ratios still have room to grow.
SP:SPXLong
by HenriqueCentieiro
HOW TO CHOOSE STOCKS STEP-BY-STEP APPROACHHOW TO CHOOSE STOCKS STEP-BY-STEP APPROACH 1. Systematic approach: It's crucial to have a good strategy to identify stocks that align with your investment goals and risk tolerance. Let's learn the full process. 2. Identify Companies with Strong Fundamentals: Evaluate the following metrics while selecting stocks. • Price-to-Earnings (P/E) Ratio • Return on Equity (ROE) • Debt-to-Equity Ratio • Dividend Yield • Free Cash Flow (FCF) Here's an evaluation of each of the mentioned metrics a. Price-to-Earnings (P/E) Ratio: The Price-to-Earnings ratio (P/E ratio) is one of the most commonly used valuation metrics. It compares a company's stock price to its earnings per share (EPS). The formula is: P/E Ratio = Stock Price / Earnings Per Share (EPS) A high P/E ratio may indicate that investors have high expectations for the company's future growth potential, while a low P/E ratio may suggest that the stock is undervalued. However, a high P/E ratio could also mean the stock is overvalued or that the company is experiencing temporary issues. b. Return on Equity (ROE): Return on Equity measures a company's profitability relative to shareholders' equity. It is calculated as: ROE = (Net Income / Shareholders' Equity) * 100 ROE represents how efficiently a company is using shareholders' capital to generate profits. A higher ROE generally indicates better financial performance and management effectiveness. However, it's essential to compare ROE within the same industry, as different industries may have varying capital structures and profitability expectations. c. Debt-to-Equity Ratio: The Debt-to-Equity ratio (D/E ratio) assesses a company's financial leverage by comparing its total liabilities to shareholders' equity. The formula is: D/E Ratio = Total Debt / Shareholders' Equity A high D/E ratio may suggest that the company relies heavily on debt to finance its operations, which can increase financial risk. On the other hand, a low D/E ratio may indicate a more conservative capital structure. A balance between debt and equity is generally preferred, depending on the industry and the company's overall financial health. d. Dividend Yield: The Dividend Yield is a financial ratio that shows the annual dividend income as a percentage of the current stock price. The formula is: Dividend Yield = (Annual Dividend Per Share / Stock Price) * 100 Dividend-paying stocks with a higher yield can be attractive to income-focused investors. However, it's essential to consider the sustainability of the dividend and the company's ability to maintain or increase it over time. e. Free Cash Flow (FCF): Free Cash Flow represents the cash a company generates from its operating activities after accounting for capital expenditures. It provides insight into a company's financial flexibility and ability to invest in growth opportunities or return cash to shareholders. The formula is: FCF = Operating Cash Flow - Capital Expenditures A positive and growing FCF is generally a positive sign, as it suggests the company can fund its operations and invest in future growth without relying on excessive debt or equity issuance. Strong fundamentals indicate a company's ability to generate consistent earnings and withstand market fluctuations. 3. Analyze Competitive Position: Assess a company to see if they have a competitive edge in the market. Factors like brand strength, patents, unique technology, or dominant market share can contribute to a company's competitive edge. 4. Study Historical Performance and Future Growth Potential: Look for consistent revenue and earnings growth over time. Additionally, assess the company's growth for future by considering factors like new product launches, expansion plans, and market opportunities. 5. Monitor and Review: After selecting stocks, it's crucial to monitor and review your investments regularly. Evaluate your portfolio's performance and make adjustments as necessary to ensure it remains aligned with your investment goals. Here are some additional tips for choosing stocks: 6. Diversification: Diversification is a key principle in stock investing. It involves spreading your investment across different companies, industries, or asset classes. By diversifying, you reduce the risk associated with any single stock or sector performing poorly, as losses in some areas may be offset by gains in others. Diversification can be achieved through mutual funds, exchange-traded funds (ETFs), or by individually selecting stocks from various sectors. 7. Risk Assessment: Understanding and assessing the risks associated with a particular stock or investment is essential. Each stock carries its own set of risks, including market risk, sector-specific risks, company-specific risks, and broader economic risks. Consider your risk tolerance and the amount of risk you are willing to take on before investing in any stock. 8. Technical Analysis vs. Fundamental Analysis: Investors use two main approaches to analyze stocks: technical analysis and fundamental analysis. Technical analysis involves studying historical price and volume patterns to make predictions about future price movements. On the other hand, fundamental analysis, which was partially covered in step 2, involves evaluating a company's financial health, performance, and potential for growth. Understanding the differences between these approaches can help you decide which one aligns better with your investment strategy. 9. Long-term vs. Short-term Investing: Decide whether you want to be a long-term investor or a short-term trader. Long-term investing involves holding onto stocks for extended periods, often years, to benefit from potential long-term growth. Short-term trading involves buying and selling stocks over shorter periods, typically to take advantage of short-term price movements. Your choice will depend on your investment goals and risk tolerance. 10. Consider Dividends: Dividends are payments made by some companies to their shareholders from their profits. If you are seeking a regular income stream or want to reinvest in more stocks, consider choosing companies that offer dividends. Dividend-paying stocks can be an essential component of an income-focused investment strategy. 11. Stay Informed: Stay updated on market trends, economic indicators, and company news. Being informed about the latest developments can help you make more informed investment decisions. Read financial news, follow reputable analysts, and keep track of relevant events that could impact the stock market. 12. Avoid Emotional Investing: Avoid making investment decisions based on emotions, such as fear or excitement. Emotional investing can lead to impulsive decisions that may not align with your overall strategy. Instead, stick to your systematic approach and investment plan, considering the long-term objectives you set. 13. Understand Tax Implications: Consider the tax implications of your investments. Different countries have different tax rules for stocks, and holding periods can also affect taxation. Understanding the tax implications can help you optimize your investment returns and minimize tax liabilities. 14. Seek Professional Advice: If you are new to investing or find it challenging to select stocks, consider seeking advice from a financial advisor or investment professional. They can provide personalized guidance based on your financial situation, risk tolerance, and investment goals. 15. Stay Patient and Disciplined: Stock market investing requires patience and discipline. The market may experience ups and downs, but it's essential to stay focused on your long-term goals and avoid making impulsive decisions based on short-term market fluctuations. Advice before making any investment decisions: Do your research. Before you invest in any stock, make sure you do your research and understand the company. This includes reading the company's financial statements, following the news about the company, and talking to other investors. Diversify your portfolio. Don't put all your eggs in one basket. By diversifying your portfolio, you can reduce your risk. Don't panic sell. When the market takes a downturn, it is important to stay calm and not panic sell. Remember, the market will eventually recover.
NSE:TCSEducation
by khushaljain023
📊 6 Ratios Investors MUST Know📍The current ratio is a financial metric used to assess a company's short-term liquidity and ability to cover its immediate obligations. It is calculated by dividing a company's current assets by its current liabilities. A higher current ratio indicates a better ability to meet short-term financial obligations. 📍The price-to-earnings ratio is a valuation metric used to evaluate the relative value of a company's stock. It is calculated by dividing the market price per share by the earnings per share. The P/E ratio provides insights into investor sentiment and expectations regarding a company's future earnings growth. A higher P/E ratio often suggests that investors anticipate higher future earnings. 📍Return on equity is a profitability ratio that measures how effectively a company generates profits from shareholders' equity. It is calculated by dividing net income by shareholders' equity. ROE provides insights into a company's efficiency in utilizing shareholder investments to generate profits. A higher ROE indicates better profitability and efficient use of equity. 📍The debt-to-equity ratio is a financial leverage ratio that indicates the proportion of a company's financing that comes from debt compared to equity. It is calculated by dividing total debt by shareholders' equity. The D/E ratio helps assess a company's financial risk and its reliance on debt for operations and growth. A higher D/E ratio implies higher financial leverage and increased risk. 📍The price-to-book value ratio is a valuation metric that compares a company's market price per share to its book value per share. Book value represents the net asset value of a company, calculated by subtracting liabilities from assets. The P/B ratio is used to assess whether a stock is undervalued or overvalued. A lower P/B ratio may indicate an undervalued stock. 📍The price/earnings to growth ratio is a valuation metric that combines the P/E ratio with a company's projected earnings growth rate. It is calculated by dividing the P/E ratio by the earnings growth rate. The PEG ratio helps investors evaluate a company's stock in relation to its growth prospects. A lower PEG ratio may suggest that the stock is relatively undervalued compared to its expected earnings growth 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
6
Why PE Ratio is the Misunderstood MetricA high P/E does not tell you that stock is overvalued and a lower P/E does not mean that stock is undervalued. P/E is simply just another metric and what it reflect is "Investor's perception about Company's Future Earnings" Its shows "How Much investors are willing to pay for every $1 of Earnings" In September 2021, Meta Platforms' stock reached a high of $385 with a PE ratio of 28. However, by March 2022, the stock had dropped almost 50% from its peak, with a PE ratio of 14. As a value investor, investing solely based on PE ratio, one may have believed that Meta Platforms was undervalued at a PE of 14, as it was historically trading at a PE of 28. However, even with the discounted price, the investment would have resulted in a loss of 40-50%.
NASDAQ:METAEducation
by finasko
P:E Ratio EXPLAINED Fully with examplesWhat is the PE ratio? The price-to-earnings ratio or P/E is a financial ratio used to evaluate a company’s share. How is it calculated? Current market’s price / Earnings Per Share (EPS). Share price / EPS What does it show you? It shows you whether a company’s stock (based on its earnings) is: Overvalued or Undervalued. Also, it gives an indication on how many years it will take for the earnings of the company to equal to the share price. What does a HIGH PE show • A very high PE could mean the share may be overvalued. • Investors are paying more for each rand or dollar of earnings. • It will take longer for the investors to recoup their investments. What does a LOW PE show • Share may be undervalued. • This could signal a buying signal for investors. • Or it could signal danger as to why investors aren’t buying the share price up. What are the advantages of a PE? 1. Gives an indication on how long it will take to make up for the investment. 2. Can signal buying opportunities in some shares. 3. Can give you an example of what one company’s PE ratio is in comparison to other shares in its sector. What are the disadvantages of a PE? 1. Does not take into account of the company’s growth or future earnings potentials (You’ll need the PEG ratio). 2. Doesn’t include the company’s dividends 3. Doesn’t take into account of the other financial indicators. Note: You need to use other ratios and financial indicators to base a decision. PE isn’t good enough. The PEG Ratio is more reliable as it takes into account the growth rate of the PE over the years. Example of an Overvalued PE ratio: Company TIMX Share price R200 EPS (Earnings Per Share): R10 P:E Ratio = 20 (R200 / R10) This means investors are willing to pay R20 for every R1 of the company’s earnings. Or they are willing to pay 20 times more than what the EPS is. This is unstable as what the company is priced at versus what the investors have priced the company at could result in a bubble. And so it can get to the point where investors start selling their stock which will cause a drop in price. Also, the P:E ratio states it will take 20 years for the investors to get their money’s worth. However, if the prospects are good and the company is showing strong future growth, this could be a reason why investors are paying a PREMIUM for their stock. Example of an Undervalued PE ratio: Company TIMX Share price R100 EPS (Earnings over the share price): R25 P:E Ratio = 4 (R100 / R25) This means investors are not willing to pay a higher price for the company’s earning. In this case, they are only paying 8 times more than what the EPS is. This could indicate that the company is going through financial difficulties and is NOT expected to grow. BIG BUT! However, it’s not easy to calculate what a HIGH or LOW PE ratio is for just any company. This is because you need to compare it to their competitors and peers.
JSE:J200Education
by Timonrosso
Devon Energy - It's complicated (TL;DR @ end)To start off. Few people have even heard of Devon Energy unless they actively deal with commodities and the energy industry. Devon Energy Corporation ( NYSE:DVN ) is an Oklahoma based hydrocarbon exploration company that produces (primarily) natural gas and oil. Considering the company was only founded in the early 70s, they have quite the interesting market history since their IPO in 1988. They had absolutely spectacular growth prospects from around 2000 through to 2007. Unfortunately at one such spectacular peak (around 1700% gain since May 2000) the stock market crash of 2008 occurred in the fourth quarter. This threw their stock down drastically like many other companies and for another 12 years after that, they declined with 2 signs of a 'comeback' that were not exactly fruitful. Recently, they have taken the market by absolute surprise, beating the S&P 500 by more than 150 percentage points, announcing a revision of their already generous dividends (especially in comparison to their competitors), 3rd quarter earnings and the anticipated earnings published by various analysts. Needless to mention they were 1 of 3 very popular non-tech stocks to beat the market by a considerable amount (YTD). Their 3rd quarter earnings report and their recently published sustainability report regarding their operations in the Permian Basin have instilled hope in many investors and many are anticipating a bull market despite the, already occurring strong buy indicators. Whether this may be considered another one of those fruitless 'comebacks' is very much up for debate. The increased dividend payout may just be a sign that they have altered their policies for the long-term loyal investor and future prospects may very well be extremely profitable, especially given the current market conditions and maybe the 'low'* P/E multiplier may just be a sign of future performance and inherent value too. As usual, any other opinions, news and facts are always welcome, thank you for reading and comment away! TL;DR: NYSE:DVN has had a confusing past but increased 3rd quarter earnings, a moderately attractive P/E ratio (YTD), future earnings from their main operations in the Permian Basin and a dividend revision may all just hint towards a better future for the company and potentially a profitable investment or it may very well turn out to be another fruitless price climb that results in another drop. *In this case, I have used the term 'low' relative to other corporations of similar scale that deal with commodities and what PE multipliers they acquire when under a growth period.
NYSE:DVN
by Michael_Axio
SentinelOne $S, recent IPO breakoutSentinelOne is a cybersecurity company with presence in the US, UK and Tel Aviv. Some of its clinets are Aston Martin, NASDAQ:JBLU , NASDAQ:ADSK and NYSE:FVRR . Its Price/Earnings ratio is negative but had a +120% change in sales from the last quarter. That's the kind of fundamentals I like to see on IPOs. As is a recent IPO, its stock price is still too volatile. So, even though today's breakout respects all my BUY filters, I got in with half my position sizing. If tomorrow's price action follows through correctly, I'll but the rest. With a stop loss at $69.74, my target sell will be beyond $84.60. When the price crosses that target I'll adjust my stop to breakeven. IBD Investors gives NYSE:S a 19 in its Industry Rank with a 94 RS rating.
NYSE:SLong
by dpuleo19
Long-term Moon Shot | Editas MedicineEditas Medicine is a clinical stage genome editing company, With the help of CRISPR technology, it focuses on treating a range of serious diseases like: -Leber Congenital Amaurosis type 10 (Genetic form of vision loss that leads to blindness in childhood) - EDIT-101 has recently entered phase 1/2 trial for the treatment, the very first time an in vivo CRISPR treatment enters clinical trials which with positive results could instantly make Editas a leader in this new field! -Usher Syndrome 2A (Form of retinitis pigmentosa that also includes hearing loss) -Treats sickle cell diseases and beta-thalassemia (A blood disorder that reduces the production of hemoglobin) It is also -In collaboration with Juno Therapeutics to develop engineered T cells for cancer! -Agreement with Allergan Pharmaceuticals International Limited to innovate, discover and develop new gene editing medicines for a range of ocular disorder -Collaboration with Asklepios BioPharmaceutical to develop therapy to treat neurological diseases The company has a lot of potential ahead in upcoming years! Let's get more technical! UNDERVALUED, I believe now would be a good time to lock in a long term position due to those facts -Recently had a public offering of 3.5M at $66 per share (Jan 21st) -Pe Ratio -39x -Fair Value of $479.88 US -Fib Retracement to current lows indicates a potential entry for the long term -LONG TERM TIMEFRAME 1D LOOKS PROMISING AS WELL!
NASDAQ:EDITLong
by NineToFive
Dynamic Range NVT Signal for Long-term Bitcoin ValuationABOUT DYNAMIC RANGE NVT SIGNAL NVT Signal (Credit: woobull.com) is akin to a "PE" ratio for Bitcoin, and can be used to identify when Bitcoin is overbought or oversold based on the relative value of transactions sent across the network. This indicator includes a 2 year moving average and standard deviation to identify outlier values, instead of declaring a static high-low range for relative valuation. THEORY A dynamic "high-low" range was chosen for the following reasons: - Bitcoin is only 10 years old, it is likely that relatively "high" and relatively "low" NVT values will change with time, as have PE ratios over the last century. - Some transactions are now made off-chain (eg. Liquid Network's private side-chain which is used by many major exchanges). If this trend continues, we can expect "normal" NVT ranges to increase with time (as the relative portion of public on-chain transaction values decreases). CALCULATION - NVT = Circulating Market Cap / 90 average On-chain Transaction Value* - Overbought (default): NVT > 2-year mean + 2*standard deviations. I.e. NVT Signal is in the top 2.5% of values for the prior 2 years. - Oversold (default) NVT < 2-year mean.** *Data source: Blockchain.info, estimated transaction value does not include returned to sender as change. **Oversold under 2-year mean was chosen due to the skewness of NVT Signal, it is not quite normally distributed. For example: NVT Signal has never been less than the 2-year mean - 2* standard deviations. This may change in the future. NOTES ON USAGE - Use with care. Bitcoin can remain "overbought" or "oversold" for extended periods (eg. 2015-2016). - As Bitcoin ages, the validity of NVT Signal will need to be monitored. Particularly with respect to potentially increasing use of side-chains, private transactions and potentially the lightning network. - It is likely that a 2-year “look back period” for calculating mean and standard deviation will not be sufficient in the decades to come. As Bitcoin matures and stabilizes (some time in the future), a longer "look back period" should probably be used. To allow for this, the defaults for this indicator can be easily adjusted.
BNC:BLXLong
by capriole_charles
20
QCOM: The Sleeping 5G Giant AwakensOne of the major drivers of growth over the next few years will be technologies built around increasing the networking speeds of smartphones and computers. Qualcomm is at the center of that innovation, and they've proven themselves a technology and semiconductor powerhouse time and again. The last decade of smartphones I owned exclusively used QCOM chips in them! QCOM is below it's 200 day average having missed the January rally that the rest of the market enjoyed. However, MACD has broken positive in the last week, and the histogram has been consistently positive since early January. Momentum has remained negative, but is closing on a zero crossing in the next week if the current price action takes hold. QCOM has had a weak uptrend for a month already that is slowly beginning to build steam according to ADX. Directional movement is showing a divergence between +DI and -DI with -DI crossing downward over ADX as a bullish buy signal according to my technical strategy. RSI has been over 50 for a while and is beginning to break 60 and approach 75, so this is still a good a good buying price. For fundamentals, earnings reported at the end of January were strong, but QCOM seemed to languish horizontally along with the rest of the S&P500 for the month of February. P/E is at a comfortable 35 which is pretty low for the tech sector, and they have a large upward retracement from the Q3/Q4 2018 correction to recover. The P/E growth ratio is 1.42, so this is still more of a growth stock than a value stock, and it will begin to act like one once an upward price trend takes hold.
NASDAQ:QCOM
by chuckination
The PE ratio and AMZNWhat's up everyone, People seem to think the PE ratio is not important anymore. Everyone is about these "growth" stocks and what not. Let me just say this - and I know Warren Buffet, Charlie Munger, and Ben Graham will agree with me: if you long companies that are trading well past a 20 PE ratio, you are SPECULATING. I have no problem whatsoever with speculating and I've made almost all of my money speculating and not investing, but many people have been buying AMZN thinking it's a wise investment. It is not a wise investment. "Growth" is not an investment strategy. If you don't know what you are doing, you''ll get smashed. You should be TRADING the growth companies, not investing in them. Today's "growth" company is tomorrow's "shrink" company. You can quote me on that. In the first post I shared with you all covering AMZN, I told you that my father who had a $100,000 position in AMZN was very bullish at $1840 and I told him to sell and he did. It went up to $2,000 and he was becoming skeptical of my skills, but I was never going to be wrong about this. I have saved him far more than he would have earned holding it at this point. I only had to look at one thing to know you should not be holding this stock and the one thing was the PE ratio. It was 300 at the time. Earnings in the next report literally doubled. So, it then went to 150. Big deal, even if earnings 4x it's still a joke. There is just no way you can invest in companies that trade that high above their earnings. Let's think about why. Investment is about three things: risk, reward and time. The idea of the PE ratio is ubiquitous in every investment vehicle because it encapsulates all of these ideas. If you are trading at a 200 PE ratio, that means at that current price, to double your money, you'd have to wait for 200 years (it's a little confusing when there's no dividend, but it's still how it works in theory). In income producing real estate, there is the CAP ratio which is the same thing as the PE. It's some multiple of the net operating income. A CAP is usually 8-12. A PE is usually 16-24. Now, why might that be? Well, the reason people are willing to pay a higher multiple for stocks is because they don't have to do anything to make the money. Someone else is doing it for them. Whereas in real estate, you need to invest in the property regularly and make sure you are keeping it in good shape and run a business. It's a lot of work. That's why people don't want to wait as long to make their money back on the investment. This is how investment works and anyone who says the PE ratio is a joke for average investors is a fool. When AMZN has a 200 PE that means people are willing to pay that much because they are EXPECTING unrealistic returns over time. Now this is a simple question: why might it be unwise to expect the unrealistic? Hope you learned something. -YoungShkreli
NASDAQ:AMZNEducation
by CantorTechnologies