Stocks Evaluation

Industry
Metric Rule
Dependent

Should be below 20 for value stocks; can be higher for growth

Price to Earnings (P/E) Ratio Yes
stocks

Price Earnings to Growth (PEG) Ratio Should be below 1.0 No

Price to Sales (P/S) Ratio Should be below 2.0 (can be higher for high-growth sectors) Yes

Price to Book (P/B) Ratio Should be below 1.0 Yes

Dividend Yield The higher, the better Yes

Dividend Payout Ratio The lower, the better (caution if > 70%) No

Price to Free Cash Flow (P/FCF)

Should be less than 15 No
Ratio

Discounted Cash Flow (DCF) Model Intrinsic value should be greater than current stock price No

Return on Assets (ROA) Should be above 5% Yes

Return on Equity (ROE) Should be above 15% Yes

Profit Margin The higher, the better (compare with industry averages) Yes

Current Ratio Should be greater than 1.0 No

Quick Ratio Should be greater than 1.0 No

Debt to Equity Ratio Should be less than 1.0 Yes

Interest Coverage Ratio Should be greater than 2.0 No

Asset Turnover Should be greater than 1.0 Yes

Inventory Turnover The higher, the better Yes