The purpose of this page is to provide indicators used for analysis of companies or stocks.
Indicators used for analysis of companies or stocks is explained to the links in the table below.
| Indicator about safety | |
|---|---|
| Indicator about Profitability | |
| Indicator about profit margin | |
| Indicator about growth | |
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| Indicator about effective use of capital | |
| Indicator about valuation in Stock market | |
| Indicator about appropriate stock price level | |
To use a measure, you need to know what it is.
There are various indicators for analyzing companies or stocks, from simple to difficult.
But even simple indicators can be sufficiently utilized for investment if used in combination.
The detailed contents of the indicator are described in the link, and here, only the viewpoint of the indicator is briefly described.
All of indicator about safety are related to cash flow.
When investing in stocks, it is a precondition that the company does not go bankrupt.
All of these are simple indicators that can be understood by glancing at the financial statements, so it is recommended that you always check them.
However, even if there is a margin in cash flow, it can be also considered that management that only accumulates cash is reducing returns to shareholders.
Therefore, even if the target company meets the safety requirements, it is better to check other indicators such as growth indicators.
The profitability of a company is a source of wealth, and high profitability is desirable not only for shareholders but also for all stakeholders.
No matter how profitable it is, the profits of companies with a high cost structure will not fall to shareholders.
On the other hand, companies don't exist only for shareholders.
For capitalism to work, it is necessary for stakeholders to be win-win in the long run.
Although distribution of profit is a difficult issue, factors such as whether the company has rewarded capable employees are also important.
However, investors are taking risks in their investments.
Threfore, it is safer not to invest in companies that ignore profits.
If a company's profits do not grow, the return on investment will be limited.
Having a minimum value at the bottom and no maximum value at the top is the best part of investing in equities, and corporate growth is an important issue for investors.
Profit generation through the effective use of capital is the essence of business in capitalism.
WACC is a cost to be exact, but it has a different meaning from the cost of the main business and is closely related to the effective use of capital, so it was added to this list.
Stock prices are the result of investors pricing.
There are two ideas: the market is always right and the market is always wrong.
But, investing in individual stocks is also a task of looking for the mispricing by the market.
In the DCF method, the values obtained differ depending on the premise of calculation.
However, since the premise is also considered to be a kind of valuation, the DCF method was added to the indicator about valuation.
Whether or not the target company is a good company and whether or not the stock price is at an appropriate level are separate issues.
And the expected rate of return on stocks strongly depends on the stock price.
One way to look for market mispricing is to compare market valuations with appropriate stock price levels.