What does the Price to Earnings Ratio, Dividend Yield and Market Cap mean for Stocks?
Features
The Price to Earnings Ratio helps you understand if a stock is valued high or low by comparing its price to the money it makes (earnings). A high Price to Earnings Ratio might mean a stock is valued higher, while a low one could mean it's valued lower. This relative measure is a useful indicator to compare companies, especially if they are in the same sector.
What does the Price to Earnings Ratio, Dividend Yield and Market Cap mean for Stocks?
The Price to Earnings Ratio helps you understand if a stock is valued high or low by comparing its price to the money it makes (earnings). A high Price to Earnings Ratio might mean a stock is valued higher, while a low one could mean it's valued lower. This relative measure is a useful indicator to compare companies, especially if they are in the same sector.
The Dividend Yield shows how much a company is expected to pay out in dividends each year relative to its stock price. Expressed as a percentage and calculated as (dividend/price), it serves as a useful indicator of the potential passive income you can expect to receive from holding a stock for a year.
Market Cap measures a company's size by multiplying its stock price by the number of shares it has. This allows you to see the total valuation of the company on the market, which helps you see its size and potential stability.
Please keep in mind that when investing, your capital is at risk.
Was this article Helpuful ?
