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BA/SPX = Long Term ValueTo put it simply - put as much money as possible into NYSE:BA as soon as possible. When compared to the S&P 500 over time, we can see how investors are pricing Boeing while also taking into account macro conditions. This gives us a relative understanding of the value of Boeing over time, and it has been making new lows recently. Boeing is a government-backed company that produces many things. Yes, it produces the 737-MAX. Yes, doors are falling off of planes. Yes, planes are crashing. Open your mind for a second: Click on the below Wikipedia link to enlighten yourself about Boeing's contracts with the US government. en.wikipedia.org If you don't want to click on the link, here's a summary: Apache Helicopters, Air Force One, F-15s, missiles, and every bomber in the Air Force. Oh yeah, they also are the only American company in the aircraft manufacturing duopoly. If you buy right now, you are getting a better price on Boeing when compared to SPX than the vast majority of investors since the IPO in 1962. BUY BOEING RIGHT NOW & HOLD IT FOREVER. You're welcome for the free money.
NYSE:BALong
by bruv67
2
SONAE: Fundamental figures too good to overlook. Time to buy?Fundamental Analysis EBITDA: +7.2% YoY (to €990M in 2023) Margin: 11.8% (-0.2 points YoY) Net Income Group Share = 357 (+6.3% YoY) PER: 1680 / 357 = 4.71 (heavily undervalued considering below data and historical PERs) Net Gearing (Net Debt To Equity Ratio, ): 526/3462 = 0.15 (15%, Prudent) Total Debt To Equity Ratio: 5383 / 3462 = 1.55 (around 1 to 1.5 is healthy according to British Business Bank's article "Debt to equity ratios for healthy businesses") Current ratio: 2010/2502= 0.80 (not healthy and almost unchanged with respect to 2022, see next line. According to Wall Street Prep, 1.5 to 3.0 is healthy) Net Debt to Ebitda = 526 / 990 = 0.53 Working Capital = -1220M€, keeps being negative. Very interesting article from eFinanceManagement explains the Advantages of Negative Working Capital for a cash-rich company whose operating cycle is fast (it may mean that they can bargain very well with their suppliers who provide the funds and the flexible time limit to pay). Prev Current ratio (2022): 1938/2465 = 0.79 Proposed dividend for 2023: 0.05639€ EPS = 357M€ / 2000M = 0.18€/share (ATH?) Current dividend yield = 6.19% Dividend Payout Ratio = x 100 = 31% Free cash flow Dividend payout ratio = x 100 = 60% Technical Analysis There was a disjoint channel happening since July 2022 on the Daily Graph in which the share price dropped out in the lower end in December 2023. Since the company has very good fundamentals, the possibility of an inverse H&S could be around the corner, having an interesting point of entry at 0.78-0.81. However, the share price is already heavily undervalued considering the fundamental analysis previously done. The daily RSI (14) bounced back in March 2023 from below 30 directly to the upper band at 70 indicating the possibility of a continuation of share price upward movement up to +20%. Therefore, it is up to the investor to decide whether at current prices (0.85-0.88€) is already worth the risk (if the 0.78€ ever gets touched and then bounces back up, the drawdown risk would be -11.4%). Finally, it is expected that on May the company will pay the dividend. Therefore, the share price may re-adjust its value upwards in April before the dividend is paid and the share price is subsequently slashed down again. Have a great week ahead.
GETTEX:YSONLong
by alexinve
#Bitcoin Intermarket analysisAs you can see in this chart, there is a very interesting relationship between the US100/US500 ratio and Bitcoin. Before discussing the possible outcomes of this chart, let's gain a better perspective on this intermarket relationship chart. On one hand, we have the US100, which is a technology index divided by the US500, representing the largest US companies. On the other hand, we have Bitcoin represented by the orange line chart. Observing these two charts together, we notice that they move together most of the time, if not all the time, with occasional instances where one leads and the other follows. Currently, we can observe that the US100/US500 ratio is on the verge of creating a new low for the first time since the beginning of 2023. If this occurs, I believe it could signal the end of the significant bullish run of Bitcoin. If you've found this analysis helpful, please take a moment to like, comment, or share your thoughts with me.
CAPITALCOM:US100Short
by mohemati
2
LABU / LABD Ratio Anchored VWAP over /under LABU LONGOn the weekly chart a LABU / LABD ratio is plotted with anchored VWAP bands and a volume profile overlaid. I wanted to analyze this to affirm the highest of prospects for the Biotechnology sector for 2024. LABU is triple leveraged Up while LABD is the inverse Down. A good unleveraged biotech ETF is XBI. The chart shows LABU in a VWAP band and breakout through the hohg volume area and then over it beginning early November. Unusually high relative volume and volatility ramped up about the same time. I readily conclude that LABU is the buy right now with the ratio rising. It is a low beat ETF with good range due to the leveraging and high forecasts for 2024. I will make buys on LABU at regular intervals on a 60-120 minute time frame looking for the weekly lows. I will set an alert for a falling ratio on the 3H to daily chart to assess should the supertrend fade. I believe that this will be a safe low risk swing long trade.
AMEX:LABULong
by AwesomeAvani
SOXL / SOXS , this ratio analysis shows when to trade eachSOXL is the triple leveraged semi-conductor ETF while SOXS is its inverse. While SOXL is primarily up trending in its intermediate and full-time history, it does from time to time have a correction mainly when the technology sector gets challenged. I have found that plotting the ratio of the share values is a very accurate way of pinpointing those corrections and temporarily buy some SOXS to offset the downward price action and nullifying any loss. This is more or less insurance in case the overall position must be closed for one reason or another or transient hedging. As can be seen, these corrections last 1-5 days . This strategy is effective risk management as during the correction the SOXS gains some of what SOXL loses especially if the share dollars are equally balanced. Ever better is the same thing on a 2-3 hour time frame albeit it with more hedging trades. I have found that this strategy works on a variety of inverse ETF pairs. Most of them however do not have one side going up more or less continuously and instead oscillate rather than simple and shallow corrections like this pair. Please give a like if you this this could be helpful to your trading.
AMEX:SOXLLong
by AwesomeAvani
YINN & YANG Market Cycles and Ratios YINN LONG nowThis weekly chart of the YANG /YINN ratio explains the rationale of the demonstration of the market cycle over the period of a few years as it relates to taking a swing trade in one or the other and finding the likely pivot points based on resistance and support as static levels or importance. Dynamic levels using an anchored VWAP and also a Bollinger Band are used to support analysis and finding pivot points of importance. This is meant to be a methodology of decreasing risk while optimizing reward. The same methodology could be deployed onto a shorter time frame of 120 minute time frame to zigzag more often with greater precision and potentially achieving greater profits over a given time interval. An optimal reversal on the high side is a confluence of the horizontal resistance /supply area with the upper Bollinger Band and the uppermost of the anchor VWAP bands.
AMEX:YANGLong
by AwesomeAvani
1
TSLA priced in Spot Gold. Should I sell or buy ?I have holdings in both TSLA and XAUSUD. The question arises should I sell one to buy the other? To answer the question. I have set up a ratio between the two of them on a daily chart. Overlaid onto the chart is a pair of Hull Moving Averages the shorter MA with a period of 49 in blue and the longer by about 3x at 154 in red. ( These are multiples of 7 if you are curious why, leave a comment.) I am looking for moving average cross overs of the golden or death type. The dual time frame RS indication compares the lower TF of 3 hrs with the higher TF of one week. The ratio is now just under the POC line of the long term volume profile so traders shorting this ratio ( those selling TSLA and /or buying gold) are now in charge. My analysis is that the ratio has hit a pivot high, the trend is now downward as the blue line going under the red is a death cross. The RSI indicator has a confirmatory similar cross. Accordingly, I will sell some TSLA and buy a similar amount of spot gold instead.
NASDAQ:TSLAShort
by AwesomeAvani
HOW-TO apply an indicator that is only available upon request?Recently, I've realized that my typical day involves constant encounters with indicators. For example, when the alarm clock rings, it's an indicator that it's morning and time to get up. I am checking the phone and once again paying attention to the indicators: battery charge and network signal level. I figure out in just one second that such a complex element of the phone as the battery is 100% charged and the signal from the cell towers is good enough. Then I’m going out on a busy street, and it's only because of the traffic light indicator that I can safely cross the road to reach the parking lot. Looking at the on-board computer of my car, with its many indicators, I know that all the components of this complicated mechanism are working properly, and I can start driving. Now, imagine what would happen if none of this existed. I would have to act blindly, relying on luck: hoping that I would wake up on time, that the phone would work today, that car drivers would let me cross the road, and that my own car would not suddenly stop because it ran out of gas. We can say that indicators help to explain complex processes or phenomena in simple and understandable language. I think they will always be in demand in today's complex world, where we deal with a huge flow of information that cannot be perceived without simplifications. If we talk about the financial market, it's all about constant data, data, data. Add in the element of randomness and everything becomes totally messed up. To create indicators that simplify the analysis of financial information, the TradingView platform uses its own programming language — Pine Script . With this language, you can describe not only unique indicators, but also strategies — meaning algorithms for opening and closing positions. All these tools are grouped together under the term "script" . Just like a trade or educational idea, a script can also be published. After this, it will be available to other users. The published script can be: 1. Visible in the list of community scripts with unrestricted access. Simply find the script by its name and add it to the chart. 2. Visible in the list of community scripts, but access is by invitation only. You'll need to find the script by its name and request access from its author. 3. Not visible in the list of community scripts, but accessible via a link. To add such a script to a chart, you need to have the link. 4. Not visible in the list of community scripts; access is by invitation only. You'll need both a link to the script and permission for access obtained from its author. If you have added to your favorites a script that requires permission from the author, you'll only be able to start using the indicators after the author includes you in the script's user list. Without this, you will get an error message every time you add an indicator to the chart. In this case, contact the author to learn how to gain access. Instructions on how to contact the author are located after the script's description and highlighted within a frame. There you will also find the 'Add to favorite indicators' button. The access can be valid until a certain date or indefinitely. If the author has granted access, you will be able to add the script to the chart.
NASDAQ:TSLAEducation
by Be_Capy
Introduction to Relative Strength or Ratio 1-2In part one (linked) we discussed how to construct and use relative strength ratios (RS) in trading and analysis. We also discussed common errors and best use. In part two we finish that general discussion. In part three we will analyze consumer staples verses consumers discretionary and begin to discuss other ratios that I find useful. How do spreads correct? One mistake is assuming that a spread will always be corrected by the rich security moving lower to meet the cheaper security. In actuality there are multiple ways a spread can correct. For instance, the rich market corrects lower relative to the cheaper market, the rich market declines while the cheap market rises, or the rich market remains relatively fixed while the cheap market rallies. And remember, this is all done within the context of the broader market trend. This isn't particularly important when using spreads as informative to the business or market cycle (as I do). But if you are trading pairs (which outside of rates markets, I don't) the legs should generally be market neutral or directionally ambivalent. Along this same line, if the dollar value of the two legs is vastly different, the share counts must be adjusted to close to money neutral or the disproportionally large side of the trade will dominate. This can also be an issue when the notional amounts of the two instruments are very different. For instance, two-year futures verses ten-year futures. Twos represent 200k notional while tens represent 100k notional. They also have far different sensitivities (duration) to a given change in rates. It should also be recognized that some sectors or ETFs are dominated by one or two very large names that skew directionality in favor of those few names. Looking for ETFs comprised of equally weighted components will mostly eliminate this issue. For instance equal weighted consumer staples (RSPS) verses equal weighted consumer discretionary (RSPD). It's extremely important that you know what you are measuring. A good example is the change in the ratio between investment grade bonds (LQD) and high yield bonds (HYG). A quick glance at the chart might suggest that High Yield is weakening relative to Investment Grade. The easy conclusion would be that fundamentals in the high yield sector were deteriorating and investors were exiting HYG. While fundamentals are modestly deteriorating in HYG more quickly than in LQD, the dominant driver is the difference in duration between the two sectors. This can be seen when running the ratio between ten year and three-year treasuries and comparing it to LQD/HYG. Many analysts smooth the RS line with moving averages. This is particularly useful when adjusting for the higher volatility of shorter time frames. This isn't my preference. First, I prefer to use longer periods (particularly weekly) in my analysis. Second, while averages are useful, they aren't an essential part of my own analysis toolkit. But there is value and moving averages can be used on spreads just as they are used on the underlying securities. Finally, ratios can provide tremendous insight into economy and market cycles, for instance when, after a long RS decline, copper begins to strengthen relative to gold, the industrial economy may be entering the early stage of recovery. Or when consumer staples RS inflects higher relative to consumer discretionary it's likely that the outlook for the consumer, and by extrapolation the economy, is weakening. In future parts we will discuss and illustrate several of these ratios. And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Taylor Financial Communications Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
Editors' picks
AMEX:LQDEducation
by CMT_Association
7
I want to buy either AMZN or a leveraged gold ETF like JNUGSo my question is which one is better right now? To anwer that question, I set up a daily chart of the ratio of the prices with a volume profile and anchored VWAP for context and analysis. I have found that the ratio had a pullback into the support of an anchored VWAP band below the higher and to the POC line where a bullish contnuation resumed. On the RSI both the low and high RS lines are in a healthy midrange. HA Candlesticks are fairly wide-ranged and rising from a base at the POC line. My conclusion is easy, buy AMZN now. If or when rather AMZN cools off, incrementally sell out of it perhaps to add to the leveraged gold ETF. I am a long term gold bug but need to trade in the moment, and AMZN right now has far more glitter.
NASDAQ:AMZNLong
by AwesomeAvani
1
GOLD to OIL prices the RATIO ANALYSIS ( and meaning )GLD is an ETF tracking gold futures prices across a blend of durations. USO is a similar ETF for crude oil. I was interested to see what the ratios look like and considering the trading advise of buy low should I be trading and bartering gold to get oil or viceversa. It is applicable for be because I am in part a commodities trader and has some activities on the leveraged forex market. On the daily chart dressed with a set of two long term anchored VWAP standard deviation lines , and some horizontal static resistance lines added, it is obvous to me that the ratio is currently sitting on the mean VWAP band for support confluent with the lower trendline of the ascending megaphone pattern which is typically considered demostrative of increasing volatility. I conclude that if I am a barterer I should trade my oil for gold. If I have gold only and dry powder I should increase my gold holdings. If I prefer trading oil I should short the market. This is because the ratio is set up to rise. The means that gold will rise or oil will fall or some hybrid combination of that. My entry here is when the volatility on the indicator is green and crosses over the running average. This is a simple demonstration of how charting with TradingView can help a trader make well- grounded and profitable trading decisions while lowering risk and making profits more probable. What do you think of this analysis? What are your agreements or disagreements with it?
AMEX:GLD
by AwesomeAvani
2
Price/Earnings: amazing interpretation #2In my previous post , we started to analyze the most popular financial ratio in the world – Price / Earnings or P/E (particularly one of the options for interpreting it). I said that P/E can be defined as the amount of money that must be paid once in order to receive 1 monetary unit of diluted net income per year. For American companies, it will be in US dollars, for Indian companies it will be in rupees, etc. In this post, I would like to analyze another interpretation of this financial ratio, which will allow you to look at P/E differently. To do this, let's look at the formula for calculating P/E again: P/E = Capitalization / Diluted earnings Now let's add some refinements to the formula: P/E = Current capitalization / Diluted earnings for the last year (*) (*) In my case, by year I mean the last 12 months. Next, let's see what the Current capitalization and Diluted earnings for the last year are expressed in, for example, in an American company: - Current capitalization is in $; - Diluted earnings for the last year are in $/year. As a result, we can write the following formula: P/E = Current capitalization / Diluted earnings for the last year = $ / $ / year = N years (*) (*) According to the basic rules of math, $ will be reduced by $, and we will be left with only the number of years. It's very unusual, isn't it? It turns out that P/E can also be the number of years! Yes, indeed, we can say that P/E is the number of years that a shareholder (investor) will need to wait in order to recoup their investments at the current price from the earnings flow, provided that the level of profit does not change . Of course, the condition of an unchangeable level of profit is very unrealistic. It is rare to find a company that shows the same profit from year to year. Nevertheless, we have nothing more real than the current capitalization of the company and its latest profit. Everything else is just predictions and probable estimates. It is also important to understand that during the purchase of shares, the investor fixates one of the P/E components - the price (P). Therefore, they only need to keep an eye on the earnings (E) and calculate their own P/E without paying attention to the current capitalization. If the level of earnings increases since the purchase of shares, the investor's personal P/E will decrease, and, consequently, the number of years to wait for recoupment. Another thing is when the earnings level, on the contrary, decreases – then an investor will face an increase in their P/E level and, consequently, an increase in the payback period of their own investments. In this case, of course, you have to think about the prospects of such an investment. You can also argue that not all 100% of earnings are spent paying dividends, and therefore you can’t use the level of earnings to calculate the payback period of an investment. Yes, indeed: it is rare for a company to give all of its earnings to dividends. However, the lack of a proper dividend level is not a reason to change anything in the formula or this interpretation at all, because retained earnings are the main fundamental driver of a company's capitalization growth. And whatever the investor misses out on in terms of dividends, they can get it in the form of an increase in the value of the shares they bought. Now, let's discuss how to interpret the obtained P/E value. Intuitively, the lower it is, the better. For example, if an investor bought shares at P/E = 100, it means that they will have to wait 100 years for their investment to pay off. That seems like a risky investment, doesn't it? Of course, one can hope for future earnings growth and, consequently, for a decrease in their personal P/E value. But what if it doesn’t happen? Let me give you an example. For instance, you have bought a country house, and so now you have to get to work via country roads. You have an inexpensive off-road vehicle to do this task. It does its job well and takes you to work via a road that has nothing but potholes. Thus, you get the necessary positive effect this inexpensive thing provides. However, later you learn that they will build a high-speed highway in place of the rural road. And that is exactly what you have dreamed of! After hearing the news, you buy a Ferrari. Now, you will be able to get to work in 5 minutes instead of 30 minutes (and in such a nice car!) However, you have to leave your new sports car in the yard to wait until the road is built. A month later, the news came out that, due to the structure of the road, the highway would be built in a completely different location. A year later your off-road vehicle breaks down. Oh well, now you have to get into your Ferrari and swerve around the potholes. It is not hard to guess what is going to happen to your expensive car after a while. This way, your high expectations for the future road project turned out to be a disaster for your investment in the expensive car. It works the same way with stock investments. If you only consider the company's future earnings forecast, you run the risk of being left alone with just the forecast instead of the earnings. Thus, P/E can serve as a measure of your risk. The higher the P/E value at the time you buy a stock, the more risk you take. But what is the acceptable level of P/E ? Oddly enough, I think the answer to this question depends on your age. When you are just beginning your journey, life gives you an absolutely priceless resource, known as time. You can try, take risks, make mistakes, and then try again. That's what children do as they explore the world around them. Or when young people try out different jobs to find exactly what they like. You can use your time in the stock market in the same manner - by looking at companies with a P/E that suits your age. The younger you are, the higher P/E level you can afford when selecting companies. Conversely, in my opinion, the older you are, the lower P/E level you can afford. To put it simply, you just don’t have as much time to wait for a return on your investment. So, my point is, the stock market perception of a 20-year-old investor should differ from the perception of a 50-year-old investor. If the former can afford to invest with a high payback period, it may be too risky for the latter. Now let's try to translate this reasoning into a specific algorithm. First, let's see how many companies we are able to find in different P/E ranges. As an example, let's take the companies that are traded on the NYSE (April 2023). As you can see from the table, the larger the P/E range, the more companies we can consider. The investor's task comes down to figuring out what P/E range is relevant to them in their current age. To do this, we need data on life expectancy in different countries. As an example, let's take the World Bank Group's 2020 data for several countries: Japan, India, China, Russia, Germany, Spain, the United States, and Brazil. To understand which range of P/E values to choose, you need to subtract your current age from your life expectancy: Life Expectancy - Your Current Age I recommend focusing on the country where you expect to live most of your life. Thus, for a 25-year-old male from the United States, the difference would be: 74,50 - 25 = 49,50 Which corresponds with a P/E range of 0 to 50. For a 60-year-old woman from Japan, the difference would be: 87,74 - 60 = 27,74 Which corresponds with a P/E range of 0 to 30. For a 70-year-old man from Russia, the difference would be: 66,49 - 70 = -3,51 In the case of a negative difference, the P/E range of 0 to 10 should be used. It doesn’t matter which country's stocks you invest in if you expect to live most of your life in Japan, Russia, or the United States. P/E indicates time, and time flows the same for any company and for you. So, this algorithm will allow you to easily calculate your acceptable range of P/E values. However, I want to caution you against making investment decisions based on this ratio alone. A low P/E value does not guarantee that you are free of risks . For example, sometimes the P/E level can drop significantly due to a decline in P (capitalization) because of extraordinary events, whose impact can only be seen in a future income statement (where we would learn the actual value of E - earnings). Nevertheless, the P/E value is a good indicator of the payback period of your investment, which answers the question: when should you consider buying a company's stock? When the P/E value is in an acceptable range of values for you. But the P/E level doesn’t tell you what company to consider and what price to take. I will tell you about this in the next posts. See you soon!
NASDAQ:AMZNEducation
by Be_Capy
2
Price / Earnings: Interpretation #1In one of my first posts , I talked about the main idea of ​​my investment strategy: buy great “things” during the sales season . This rule can be applied to any object of the material world: real estate, cars, clothes, food and, of course, shares of public companies. However, a seemingly simple idea requires the ability to understand both the quality of “things” and their value. Suppose we have solved the issue with quality (*). (*) A very bold assumption, I realize that. However, the following posts will cover this topic in more detail. Be a little patient. So, we know the signs of a high-quality thing and are able to define it skilfully enough. But what about its cost? "Easy-peasy!" you will say, "For example, I know that the Mercedes-Benz plant produces high-quality cars, so I should just find out the prices for a certain model in different car dealerships and choose the cheapest one." "Great plan!" I will say. But what about shares of public companies? Even if you find a fundamentally strong company, how do you know if it is expensive or cheap? Let's imagine that the company is also a machine. A machine that makes profit. It needs to be fed with resources, things are happening in there, some cogs are turning, and as a result we get earnings. This is its main goal and purpose. Each machine has its own name, such as Apple or McDonald's. It has its own resources and mechanisms, but it produces one product – earnings. Now let’s suppose that the capitalization of the company is the value of such a machine. Let's see how much Apple and McDonald's cost today: Apple - $2.538 trillion McDonald's - $202.552 billion We see that Apple is more than 10 times more expensive than McDonald's. But is it really so from an investor's point of view? The paradox is that we can't say for sure that Apple is 10 times more expensive than McDonald's until we divide each company's value by its earnings. Why exactly? Let's count and it will become clear: Apple's diluted net income - $99.803 billion a year McDonald's diluted net income - $6.177 billion a year Now read this phrase slowly, and if necessary, several times: “The value is what we pay now. Earnings are what we get all the time” . To understand how many dollars we need to pay now for the production of 1 dollar of profit a year, we need to divide the value of the company (its capitalization) by its annual profit. We get: Apple - $25.43 McDonald’s - $32.79 It turns out that in order to get $ 1 earnings a year, for Apple we need to pay $25.43, and for McDonald's - $32.79. Wow! Currently, I believe that Apple appears cheaper than McDonald's. To remember this information better, imagine two machines that produce one-dollar bills at the same rate (once a year). In the case of an Apple machine, you pay $25.43 to issue this bill, and in the case of a McDonald’s machine, you pay $32.70. Which one will you choose? So, if we remove the $ symbol from these numbers, we get the world's most famous financial ratio Price/Earnings or P/E . It shows how much we, as investors, need to pay for the production of 1 unit of annual profit. And pay only once. There are two formulas for calculating this financial ratio: 1. P/E = Price of 1 share / Diluted EPS 2. P/E = Capitalization / Diluted Net Income Whatever formula you use, the result will be the same. By the way, I mainly use the Diluted Net Income instead of the regular one in my calculations. So do not be confused if you see a formula with a Net Income – you can calculate it this way as well. So, in the current publication, I have analyzed one of the interpretations of this financial ratio. But, in fact, there is another interpretation that I really like. It will help you realize which P/E level to choose for yourself. But more on that in the next post. See you!
Editors' picks
NASDAQ:TSLAEducation
by Be_Capy
11
What can financial ratios tell us?In the previous post we learned what financial ratios are. These are ratios of various indicators from financial statements that help us draw conclusions about the fundamental strength of a company and its investment attractiveness. In the same post, I listed the financial ratios that I use in my strategy, with formulas for their calculations. Now let's take apart each of them and try to understand what they can tell us. - Diluted EPS . Some time ago I have already told about the essence of this indicator. I would like to add that this is the most influential indicator on the stock market. Financial analysts of investment companies literally compete in forecasts, what will be EPS in forthcoming reports of the company. If they agree that EPS will be positive, but what actually happens is that it is negative, the stock price may fall quite dramatically. Conversely, if EPS comes out above expectations - the stock is likely to rise strongly during the coverage period. - Price to Diluted EPS ratio . This is perhaps the best-known financial ratio for evaluating a company's investment appeal. It gives you an idea of how many years your investment in a stock will pay off if the current EPS is maintained. I have a particular take on this ratio, so I plan to devote a separate publication to it. - Gross margin, % . This is the size of the markup to the cost of the company's product (service) or, in other words, margin . It is impossible to say that small margin is bad, and large - good. Different companies may have different margins. Some sell millions of products by small margins and some sell thousands by large margins. And both of those companies may have the same gross margins. However, my preference is for those companies whose margins grow over time. This means that either the prices of the company's products (services) are going up, or the company is cutting production costs. - Operating expense ratio . This ratio is a great indicator of management's ability to manage a company's expenses. If the revenue increases and this ratio decreases, it means that the management is skillfully optimizing the operating expenses. If it is the other way around, shareholders should wonder how well management is handling current affairs. - ROE, % is a ratio reflecting the efficiency of a company's equity performance. If a company earned 5% of its equity, i.e. ROE = 5%, and the bank deposit rate = 7%, then shareholders have a reasonable question: why invest equity in business development, if it can be placed in a bank deposit and get more, without expending extra effort? In other words, ROE, % reflects the return on invested equity. If it is growing, it is definitely a positive factor for the company and the shareholders. - Days payable . This financial ratio is an excellent indicator of the solvency of the company. We can say that it is the number of days it will take the company to pay all debts to suppliers from its revenue. If the number of days is relatively small, it means that the company has no delays in paying for supplies and therefore no money problems. I consider less than 30 days to be acceptable, but over 90 days is critical. - Days sales outstanding . I already mentioned in my previous posts that when a company is having a bad sales situation, it may even sell its products on credit. Such debts accumulate in accounts receivable. Obviously, large accounts receivable are a risk for the company, because the debts may simply not be paid back. For ease of control over this indicator, they invented such a financial ratio as "Days sales outstanding". We can say that this is the number of days it will take the company to earn revenue equivalent to the accounts receivable. It's one thing if the receivables are 365 daily revenue and another if it's only 10 daily revenue. Like the previous ratio: less than 30 days is acceptable to me, but over 90 days is critical. - Inventory to revenue ratio . This is the amount of inventory in relation to revenue. Since inventory includes not only raw materials but also unsold products, this ratio can indicate sales problems. The more inventory a company has in relation to revenue, the worse it is. A ratio below 0.25 is acceptable to me; a ratio above 0.5 indicates that there are problems with sales. - Current ratio . This is the ratio of current assets to current liabilities. Remember, we said that current assets are easier and faster to sell than non-current, so they are also called quick assets. In the event of a crisis and lack of profit in the company, quick assets can be an excellent help to make payments on debts and settlements with suppliers. After all, they can be sold quickly enough to pay off these liabilities. To understand the size of this "safety cushion", the current ratio is calculated. The larger it is, the better. For me, a suitable current ratio is 2 or higher. But below 1 it does not suit me. - Interest coverage . We already know that loans play an important role in a company's operations. However, I am convinced that this role should not be the main one. If a company spends all of its profits to pay interest on loans, it is working for the bank, not for the shareholders. To find out how tangible interest on loans is for the company, the "Interest coverage" ratio was invented. According to the income statement, interest on loans is paid out of operating income. So if we divide the operating income by this interest, we get this ratio. It shows us how many times more the company earns than it spends on debt service. To me, the acceptable coverage ratio should be above 6, and below 3 is weak. - Debt to revenue ratio . This is a useful ratio that shows the overall picture of the company's debt situation. It can be interpreted the following way: it shows how much revenue should be earned in order to close all the debts. A debt to revenue ratio of less than 0.5 is positive. It means that half (or even less) of the annual revenue will be enough to close the debt. A debt to revenue ratio higher than 1 is considered a serious problem since the company does not even have enough annual revenue to pay off all of its debts. So, the financial ratios greatly simplify the process of fundamental analysis, because they allow you to quickly draw conclusions about the financial condition of the company, without looking up and down at its statements. You just look at ratios of key indicators and draw conclusions. In the next post, I will tell you about the king of all financial ratios - the Price to Diluted EPS ratio, or simply P/E. See you soon!
AMEX:SPYEducation
by Be_Capy
Financial ratios: digesting them togetherI hope that after studying the series of posts about company financial statements, you stopped being afraid of them. I suggest we build on that success and dive into the fascinating world of financial ratios. What is it? Let's look at the following example. Let's say you open up a company's balance sheet and see that the amount of debt is $100 million. Do you think this is a lot or a little? To me, it's definitely a big deal. But can we say the company has a huge debt based only on how we feel about it? I don't think so. However, if you find that a company that generates $10 billion in annual revenue has $100 million in debt (i.e. only 1% of revenue), what would you say then? That's objectively small, isn't it? It turns out that without correlating one indicator with another, we cannot draw any objective conclusion. This correlation is called the Financial Ratio . The recipe for a normal financial ratio is simple: we take one or two indicators from the financial statements, add some market data, put it all into a formula that includes a division operation - we obtain the financial ratio. In TradingView you can find a lot of financial ratios in the section Financials -> Statistics . However, I only use a few financial ratios which give me an idea about the financial situation of the company and its value: What can you notice when looking at this table? - Profit and revenue are frequent components of financial ratios because they are universal units of measurement for other reporting components. Just as length can be measured in feet and weight in pounds, a company's debts can be measured in revenues. - Some financial ratios are ratios, some are percentages, and some are days. - There are no financial ratios in the table whose data source is the Cash Flow Statement. The fact is that cash flows are rarely used in financial ratios because they can change drastically from quarter to quarter. This is especially true for financial and investment cash flow. That's why I recommend analyzing cash flows separately. In my next post, I'll break down each financial ratio from this table in detail and explain why I use them specifically. See you soon!
SP:SPXEducation
by Be_Capy
Historical Tops & Where They Could Lead UsWith the world economies weakening, interest rates rising, equities tumbling, and inflation running rampant; I have been forced to generate a few panic support levels for BTC. The chart above illustrates a ratio analysis study of the major corrections from the 2013 and 2017 Bitcoin highs. By extending the ratio's of the former corrections we are able to generate two major support zones. Panic Zone 1: 20k-23k Panic Zone 2: 9.5k-12.5k While target zone 2 seems quite deep at the moment, target zone 1 is also supported by my 2019 channel analysis here: Target zone 2 could become relevant because in addition to the world's worsening economic situation, many argue that Bitcoin's rate of growth is based upon a curve rather than a linear path. If this theory holds and equities continue to tumble, then I would not rule out a sub-10k wick in the future. Though less relevant, I also conducted a simple time study above in hopes that if crypto goes into a major correction, it could be over by the end of June.
BITSTAMP:BTCUSD
by oh92
3
Bitcoin - Textbook Elliott: Minor Degree Wave 4 Nears CompletionCompletion of a Minor degree wave 4 of the Intermediate degree wave 1 is imminent. A motive wave down for the Minute degree wave C should finish the flat correction. Since Minor degree wave 2 (ending early March 2020) was a zig zag, a flat correction should have been expected for wave 4 per the guideline of alternation. A Minor degree wave 5 accompanied by a decrease in volume should follow as we push into new all time highs near $140,000. Expanding volume in wave 5 would suggests an extension reaching into the $350,000 range. This point would mark the end of Intermediate degree wave 1 and would suggest a sharp zig zag correction will likely retrace 61.8% of all progress made between December 2018 and January 2022.
by EricIker
How Big is the Tech Bubble?A ratio chart divides the value of the Nasdaq 100 by the value of (S&P 500+Dow 30+Russell 2000). The large spike in the blue line to the left illustrates how the NQ became so overvalued in relation to the S&P, the Dow, and the Russell. If the ratio pulls back, I would say it may find its balance around the lower red line, after retracing the recent parabolic spike like it did in 2000. I think it will keep going higher. I think the high prices of tech stocks are more legitimate this time around. I believe I just made a "this time is different" type of comment lol. Thoughts?
TVC:NDQ
by The_Arena_Trader
4