I’ve heard from many that P/E is “useless” when evaluating stocks nowadays due to the high growth companies like Tech stocks that average 30+ price to earnings, what’s an indicator that you still think is still fairly good at depicting a company’s fair(ish) value?
What’s still a strong financial indicator for stock picking?
byu/Cluelessjoint ininvesting
Posted by Cluelessjoint
7 Comments
Start by reading the latest 10-K, then every press release and filing from the trailing 12 months. If you’re still interested, build a valuation model and conduct a discounted cash flow analysis.
I look at their trailing PE, forward PE then compare to their average over the years. Then dividend yield if applicable and also compare that to their average. Other numbers I look at is their debt and cash, PEG, P/B, P/S, History of revenue growth and EPS + net income. Any share buyback? support and and resistance lines and if any insiders are buying as well. Basically a lot of stuff before adding them to my watch list.
I’m not sure there is one specific indicator that can tell you whether a stock will go up or down in the near future
Enterprise Value = Market Capitalization + Total Debt – Cash and Cash Equivalents
That’s probably where I would start.
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Look at the revenue and income chart. If it is up and to the right the business is growing and stock price will follow
Price and direction