5 Price Ratios For Analyzing Stocks

5 Price Ratios For Analyzing Stocks by Mitchell Mauer

This article appeared first on The Stock Market Blueprint Blog.

What Are Price Ratios?

Price ratios are quick and easy metrics to use when analyzing investment opportunities. They tell investors how high or how low a stock is valued relative to a business’s financial results.

Low price ratios are an important characteristic of a value stock. They provide an opportunity for investors to buy the stock at a relatively cheap price.

The most widely used price ratios are:

• Price-to-Book (P/B)
• Price-to-Earnings (P/E)
• Price-to-Sales (P/S)
• Price-to-Free Cash Flow (P/FCF)
• Enterprise Value/EBITDA (Enterprise Multiple)

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Here is a breakdown of each and an explanation on how they can be used to analyze individual stocks.

Price to Book (P/B)

Calculation: (P/B) = Share Price/Book Value per Share

Definition: Book value...