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Fundamental indicators for analyzing a stock
03 Dec 2021 (495 views)  

In this post, I explain how the fundamental indicators are computed.

Company X
Profit last year: $5 million.
Number of shares: 10 million.
Profit projected for next year: $6 million.
Dividend per share: $0.24.
Current share price: $6.

Fundamental indicators:
Earning per share (EPS), trailing - $0.50 ($5 million/ 10 million), forecast - $0.60 ($6 million/ 10 million)
Price earning ratio: trailing - 12.0X ($6 / $0.50), forecast - 10.0 X ($6/$0.60)
Earning yield: trailing 8.33% ($0.50 / $6), forecast - 10.0% ($0.60/ $6)
Dividend yield: 4% ($0.24/ $6)
Market capitalization: $60 million ($6 X 10 million)
 
The earning yield is the reciprocal of the PE ratio. 

Last year, company X earned 8.33% on the share capital (i.e. earning yield), pays a dividend of 4% and retains 4.33% for its future growth.

I consider a stock to be good if it meets the following targets:

1. PE ratio less than 15.0 times
2. Dividend yield 3% or higher
3. Market capitalization: $1 billion SGD or higher

I present the financial indicators for DBS Holdings (D05.SI), as shown in Yahoo Finance, in the table below.

1. PE ratio: 12.81
2. Dividend yield: 4.18 
3. Market capitalization: $80.8 billion

 This stock meets all the 3 targets.


Tan Kin Lian
 


Fundamental indicators for analyzing a stock
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In this post, I explain how the fundamental indicators are computed.

Company X
Profit last year: $5 million.
Number of shares: 10 million.
Profit projected for next year: $6 million.
Dividend per share: $0.24.
Current share price: $6.

Fundamental indicators:
Earning per share (EPS), trailing - $0.50 ($5 million/ 10 million), forecast - $0.60 ($6 million/ 10 million)
Price earning ratio: trailing - 12.0X ($6 / $0.50), forecast - 10.0 X ($6/$0.60)
Earning yield: trailing 8.33% ($0.50 / $6), forecast - 10.0% ($0.60/ $6)
Dividend yield: 4% ($0.24/ $6)
Market capitalization: $60 million ($6 X 10 million)
 
The earning yield is the reciprocal of the PE ratio. 

Last year, company X earned 8.33% on the share capital (i.e. earning yield), pays a dividend of 4% and retains 4.33% for its future growth.

I consider a stock to be good if it meets the following targets:

1. PE ratio less than 15.0 times
2. Dividend yield 3% or higher
3. Market capitalization: $1 billion SGD or higher

I present the financial indicators for DBS Holdings (D05.SI), as shown in Yahoo Finance, in the table below.

1. PE ratio: 12.81
2. Dividend yield: 4.18 
3. Market capitalization: $80.8 billion

 This stock meets all the 3 targets.


Tan Kin Lian