Best Fundamental Indicator

K

knarendra

Active Member
#1
#1
I need best fundamental indicator? which one is best? There is lot of indicators for Fundamental like as Trading indicator. So try to get best one , two or three...



Cash Flow
Dividend
EBITDA
Gross Profit Margin
Net Profit Margin
Revenues
Taxes

Earnings per Share – EPS
Price to Earnings Ratio – P/E
Projected Earning Growth – PEG
Price to Sales – P/S
Price to Book – P/B
Dividend Payout Ratio
Dividend Yield
Book Value
Return on Equity
 
R

rvm123

Active Member
#3
#3
EPS, P/E and book value are the best set of fundamental indictors.

Projected earning growth is a parameter which has to be guessed, whereas the earlier three are real and historic figures.

Others relating to Dividend, dividend yield, dividend payout ratio are all outgo against the earnings, which does not affect the fundamenals.

EBITDA, Gross Profit Margin, Net Profit Margin, Revenues, Taxes, etc will all lead to EPS. Hence EPS takes care of all these parameters.

Return on equity is more or less EPS.

Price to Book value is more or less p/e ratio

Price to Sales will not indicate any of the fundamentals.

In addition to these, "interest coverage" (Net profit divided by Interest paid) may have to be considered. This is my what I have learnt from the market.
The companies with good EPS, P/e, Book value, etc also fails, if their interest coverage is less. Best example - Surya Pharmaceuiticals, zylog systems
 
Last edited:
R

rvm123

Active Member
#5
#5
Return on Equity is nothing but Netprofit divided by Equity capital. EPS (Earnings per share) is nothing but Netprofit divided by Total number of equity shares. Thereby, both are almost the same.

In broader sense, if your net profit is more, Return on equity will be more and also EPS will be more.
 
A

aryan.

Active Member
#6
#6
rvm123 said:
Return on Equity is nothing but Netprofit divided by Equity capital. EPS (Earnings per share) is nothing but Netprofit divided by Total number of equity shares. Thereby, both are almost the same.
Click to expand...
Equity capital and number of shares are not equal. ROE tells you how well the company is utilizing its resources. EPS tells you how much income belongs to each share outstanding.

ROE tells investors how efficient is the company in making profits, not just simply how much it earned.

Dont get confused just because they use Net Profit, ROE and EPS tell two different stories.
 
S

Snip3r

Member
#7
#7
rvm123 said:
Return on equity is more or less EPS.

Price to Book value is more or less p/e ratio
Click to expand...
Roe has nothing to do with eps. Lets say a company has Rs 100 in total (share capital + reserves) it has 75000 shares. It makes a net profit of Rs 75/ year. Roe is whooping 75%. But eps is meagre 0.001

Similarly p/e and p/b are different. Look at pb and pe of Orissa mineral development corporation
 
K

knarendra

Active Member
#8
#8
rvm123 said:
EPS, P/E and book value are the best set of fundamental indictors.

Projected earning growth is a parameter which has to be guessed, whereas the earlier three are real and historic figures.

Others relating to Dividend, dividend yield, dividend payout ratio are all outgo against the earnings, which does not affect the fundamenals.

EBITDA, Gross Profit Margin, Net Profit Margin, Revenues, Taxes, etc will all lead to EPS. Hence EPS takes care of all these parameters.

Return on equity is more or less EPS.

Price to Book value is more or less p/e ratio

Price to Sales will not indicate any of the fundamentals.

In addition to these, "interest coverage" (Net profit divided by Interest paid) may have to be considered. This is my what I have learnt from the market.
The companies with good EPS, P/e, Book value, etc also fails, if their interest coverage is less. Best example - Surya Pharmaceuiticals, zylog systems
Click to expand...
Im also confuse about cochin malabar co.financial data

P/E :0.30

BOOK VALUE : -119

EPS : 209.52


Why book value in -ve? Debit problem? pl.explain
 
R

rvm123

Active Member
#9
#9
As on 31.3.2013, they have got a negative reserve of 23.01 Crores (accumulated losses) as against the equity capital of 1.77 crores. this has resulted in negative book value.

Book value = ( Reserves + equity capital ) divided by Equity capital multiplied by face value of the share

= (-23.01+1.77) / 1.77 X 10 = 120


EPS 209.52 is the sum of the last four quarters EPS (March2013 (-)21; June2013 (-)5.07; sept2013 (-)64.89 and Dec2013 (+)300.47
 
K

knarendra

Active Member
#10
#10
aryan. said:
There is no best fundamental indicator you have to look at various ratios and margins and then try to analyze the company.

You forgot to include one of the most important indicator that is the free cash flow number.

One more important ratio is the ROIC - Return on Invested Capital, much better than ROE.

You can see FCF for free at the bottom of the page

http://craytheon.com/financials/cash_flow_statement_analysis.php?company=WIPRO
Click to expand...
Hai,
ROIC and ROCE both are same?
 
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