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Company Valuation: Basic Indicators and Financial Indicators
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Company Valuation: Basic Indicators and Financial Indicators

Basic Indicators

1. MARKET CAP

Market Cap (Market Capitalization) is the total value of a company's outstanding shares. It is calculated by multiplying the current market price of a stock by its total number of outstanding shares. The formula is:

Market Cap = Shares Outstanding * Last Price

2. FREE FLOAT MKT CAP

Free Float Mkt Cap (Free Float Market Capitalization) refers to the total value of the company calculated by multiplying the current market price by its total number of free float shares. The formula is:

Free Float Mkt Cap = Free Float * Last Price

3. SHARES OUTSTANDING

Shares Outstanding (a.k.a. Outstanding Shares) refers to the total number of shares that have been issued and are currently owned by investors. Shares outstanding includes share blocks held by institutional investors and restricted shares owned by the company's officers and insiders. Shares that have been repurchased by the company as treasury stock are excluded.

4. FREE FLOAT

Free Float (Free Float Shares) refers to the number of shares that are available to the public for trade. It is generally described as all shares held by investors, other than restricted shares held by company insiders.

5. TURNOVER

TURNOVER (Turnover Value) refers to the summation of the value of all trades during the trading day.

6. % TURNOVER

% TURNOVER (Turnover ratio) measures how often shares change hands. It is a measure of stock liquidity calculated by dividing the total number of shares traded over a period (known as Volume) by the average number of shares outstanding for the trading day. The formula is:

% Turnover = Volume / Shares Outstanding * 100%

[For Stocks in Chinese Markets] % Turnover=Volume / Free Float * 100%

7. % RANGE 

% Range (Range rate) is a measure of stock volatility calculated by dividing the difference between a stock's lowest and highest price within a day by the closing price on the preceding day of trading. The formula is:

% Range = (Day’s High – Day’s Low) / Prev Close * 100%


FINANCIAL INDICATORS

1. EPS (TTM)

EPS (TTM) refers to a company's Earnings Per Share (EPS) for the Trailing Twelve Month (TTM) period. EPS is the portion of a company's profit allocated to each outstanding share of common stock and is calculated by dividing a company’s diluted profit or earnings by the diluted weighted average outstanding shares. EPS (TTM) is the sum of EPS reported in the last four quarters. 

For example, ABC Company's current financial report is 2018Q3, then it’s EPS (TTM) is the sum of EPS reported from 2018Q3, 2018Q2, 2018Q1 and 2017Q4.

Note: Except for Hong Kong and China markets, EPS (TTM) is calculated by the EPS excluding extraordinary items. 

2. P/E (TTM)

The Price-to-Earnings Ratio (P/E) is a valuation ratio where a company's current share price is divided by its EPS. P/E (TTM) means the last twelve months of EPS are used in the calculation. The formula is:

P/E (TTM) = Last Price / EPS (TTM)

Note: P/E (TTM) is not calculated when it is less than or equal to Zero (<=0).

3. P/E (FWD)

P/E (FWD) refers to Forward Price-to-Earnings (P/E Forward). It is calculated using forecasted earnings, the annual average EPS forecast reported in the latest annual report, rather than actual historical earnings. It is just an estimate and is not as reliable as current or historical earnings data. 

For example, if ABC Company's 2017 annual report has been issued while 2018 annual report is not released, then P/E (FWD) will be calculated by the annual average EPS forecast of 2018.

Note: P/E (FWD) is not calculated when it is less than or equal to Zero (<=0).

4. BVPS

BVPS (Book Value Per Share) indicates the book value (or accounting value) of each share of stock. It is defined as the Total Stockholders Equity divided by the Shares Outstanding, where Total Stockholders' Equity is the difference between the balance sheet assets and balance sheet liabilities. The formula is: 

Book Value Per Share = Total Stockholders' Equity / Shares Outstanding

5. P/B

P/B (Price-to-Book Ratio) is a financial ratio used to compare a company's current market price to its book value. The formula is:

P/B = Last Price / BVPS

Note: P/B is not calculated when it is less than or equal to Zero (<=0).

6. P/S

P/S (Price-to-Sale Ratio) is a valuation ratio that compares a company's stock price to its revenues. It is calculated by dividing the current share price by Revenue Per Share.

P/S = Last Price / Revenue Per Share

Note: Except for the Hong Kong market, Revenue Per Share is calculated by dividing the sum of revenue reported in the last four quarters by the average diluted shares outstanding.

7. DIVIDEND

DIVIDEND refers to annual dividends excluding special dividends. Due to the stable nature of dividends for US- and Canada-based companies, the annual dividend used in the calculation is the most recent dividend multiplied by the dividend frequency. For companies based in all other countries, it is the total dividends for the most recently reported 12-month period.

For example, ABC Company is listed on NASDAQ and pays dividends on a quarterly basis, therefore, ABC Company’s annual DIVIDEND is the calculation of the most recent dividend multiplied by four.

8. DIV YIELD

DIV YIELD (Dividend Yield) measures how much a company pays out in dividends each year relative to its share price. The calculation is:

DIV YIELD = Dividend / Last Price * 100%

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