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Valuation & Fundamental Analysis

Multiples, DCF inputs, and fundamental valuation. 7 indexed terms, 28 additional definitions.

Key Concepts

10-Q Filing

A 10-Q is a quarterly report filed with the SEC containing unaudited financial statements and updated management discussion, required for three of the four fiscal quarters.

Balance Sheet

The balance sheet is a financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time, following the equation Assets = Liabilities + Equity.

Competitive Advantage

A competitive advantage is a set of qualities that allows a company to outperform its rivals, generating higher profits or growth through superior products, costs, or market position.

Economic Moat

An economic moat is a sustainable competitive advantage that protects a company's profits from competitors, analogous to a medieval castle's defensive moat.

PEG Ratio (Price/Earnings to Growth)

The PEG ratio divides a stock's P/E ratio by its expected earnings growth rate, providing a growth-adjusted valuation metric where a PEG below 1.0 may indicate undervaluation.

Price Target

A price target is an analyst's projected stock price over a defined period, typically 12 months, based on fundamental valuation analysis.

Return on Equity (ROE)

Return on equity measures how much profit a company generates for each dollar of shareholder equity, indicating how efficiently management uses investor capital.

Show 28 additional definitions ▾
10-K Filing
A 10-K is the comprehensive annual report filed with the SEC containing audited financial statements, business description, risk factors, and management analysis.
Analyst Rating
An analyst rating is a Wall Street analyst's recommendation on whether to buy, hold, or sell a stock, based on their research and price target.
Annual Report
An annual report is a comprehensive document providing shareholders with financial statements, management discussion, and business strategy overview for the fiscal year.
Book Value
Book value is the net asset value of a company calculated as total assets minus total liabilities, representing the theoretical value if the company were liquidated.
Cash Flow Statement
The cash flow statement reports how a company generates and spends cash over a period, divided into operating, investing, and financing activities.
Current Ratio
The current ratio measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.
Debt-to-Equity Ratio
The debt-to-equity ratio compares a company's total debt to shareholders' equity, measuring financial leverage and the relative proportion of debt versus equity financing.
Discounted Cash Flow (DCF)
Discounted cash flow is a valuation method that estimates the present value of an investment based on its expected future cash flows, adjusted for the time value of money.
EBITDA
EBITDA is a measure of operating profitability calculated before interest, taxes, depreciation, and amortization, widely used for comparing companies across industries.
Enterprise Value (EV)
Enterprise value is the total value of a company including equity, debt, and cash, representing the theoretical takeover price of the entire business.
EV/EBITDA
EV/EBITDA is a valuation multiple comparing enterprise value to EBITDA, widely used to compare companies across sectors regardless of capital structure or tax differences.
Fair Value
Fair value is the estimated price at which a stock should trade based on fundamental analysis, representing a reasonable assessment of what a willing buyer would pay a willing seller.
Free Cash Flow (FCF)
Free cash flow is the cash a company generates from operations after subtracting capital expenditures, representing the cash available for dividends, buybacks, and debt reduction.
Income Statement
The income statement reports a company's revenue, expenses, and profit over a period, showing how the company generates earnings from its operations.
Insider Ownership
Insider ownership measures the percentage of a company's shares held by executives, directors, and other corporate insiders, indicating management alignment with shareholders.
Institutional Ownership
Institutional ownership is the percentage of a company's shares held by large financial institutions like mutual funds, pension funds, and hedge funds.
Intrinsic Value (Investing)
Intrinsic value in investing is an estimate of what a stock is truly worth based on fundamental analysis, independent of its current market price.
Margin of Safety
Margin of safety is the difference between a stock's market price and its estimated intrinsic value, providing a cushion against errors in valuation or unforeseen risks.
Net Income
Net income is a company's total profit after subtracting all expenses, taxes, and costs from revenue, representing the bottom line of the income statement.
Operating Margin
Operating margin is the percentage of revenue remaining after deducting operating expenses, measuring how efficiently a company converts sales into operating profit.
Price-to-Book Ratio (P/B)
The price-to-book ratio compares a stock's market price to its book value per share, commonly used to value banks and asset-heavy companies.
Price-to-Sales Ratio (P/S)
The price-to-sales ratio compares a stock's market cap to its annual revenue, useful for valuing unprofitable growth companies where earnings-based metrics are inapplicable.
Profit Margin (Net Margin)
Profit margin is the percentage of revenue remaining after all expenses including taxes and interest, representing the ultimate profitability of each dollar of sales.
Quick Ratio
The quick ratio measures a company's ability to meet short-term obligations using only its most liquid assets, excluding inventory from the calculation.
Return on Assets (ROA)
Return on assets measures how efficiently a company uses its total assets to generate profit, calculated as net income divided by total assets.
Revenue Growth
Revenue growth measures the rate of increase in a company's total sales over a period, the most fundamental indicator of business expansion and market demand.
SEC Filings
SEC filings are mandatory reports that public companies submit to the Securities and Exchange Commission, providing investors with audited financial data and material business information.
Working Capital
Working capital is the difference between a company's current assets and current liabilities, measuring the short-term liquidity available for daily operations.

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