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Blog: stock research and investing, explained

Plain-English guides with worked examples: how to read financial statements, value a business, use technical indicators and manage risk. See the complete Financial knowledge series →

All 154Market basics 15Trading and market structure 16Reading financial statements 15Ratios and business quality 15Valuation 15Advanced valuation and methods 15Technical analysis 15Portfolio, risk and behaviour 15Economy, sectors and the calendar 22Commodities 2Forex 5Hedge funds 3Rates and macro 1
Advanced valuation and methods4 min read The five lenses: valuation, growth, profitability, financial health, dividends A stock can be cheap, growing, profitable, safe or generous with dividends, and rarely all at once. Learn what each of the five X-Ray lenses... Read the article → Advanced valuation and methods4 min read How the StocksXray X-Ray Score works The X-Ray Score condenses valuation, growth, profitability, financial health and dividends into one 0-100 number. See the weights, the math... Read the article → Advanced valuation and methods5 min read Why fair value is a range, not a point Any fair value estimate carries large error. Learn why valuation models disagree, how a margin of safety handles it, and how StocksXray labe... Read the article → Advanced valuation and methods4 min read Regression-based multiples: what growth, ROIC and margin justify A regression-based multiple estimates the valuation ratio that a company's growth, returns on capital and margins justify, instead of just c... Read the article → Valuation5 min read Intrinsic value vs market price Price is what the market pays today; intrinsic value is what a business is worth based on the cash it can produce. Learn why they differ and... Read the article → Advanced valuation and methods4 min read Relative valuation with peer multiples Relative valuation compares a stock's multiples with those of similar companies. Learn how to pick peers and multiples, and where the method... Read the article → Valuation5 min read Margin of safety: Graham's rule for imperfect estimates Margin of safety means buying only at a meaningful discount to a conservative estimate of value. Learn the formula, the logic and how large... Read the article → Advanced valuation and methods4 min read Earnings power value: what a business is worth with no growth Earnings power value capitalizes normalized after-tax operating profit at the cost of capital, giving a no-growth value that often serves as... Read the article →
Valuation7 min read Equity risk premium explained: formula and estimates The equity risk premium is the extra return investors expect for holding stocks over risk-free bonds. Learn the three ways to estimate it an... Read the article → Advanced valuation and methods5 min read Reverse DCF: what growth is the price already assuming? A reverse DCF starts from today's stock price and solves for the growth it implies, so you can judge whether the market's expectations look... Read the article → Valuation4 min read Beta explained: measuring a stock's sensitivity to the market Beta measures how strongly a stock's returns have moved with the overall market. Learn how it is estimated, how to read it, and what it leav... Read the article → Valuation4 min read Discount rates and the CAPM The discount rate turns future cash into today's value, and the CAPM is the standard way to set the cost of equity. Learn the formula, its i... Read the article → Valuation8 min read Terminal value in a DCF: formula, methods and an example Terminal value captures all cash flows beyond a DCF's forecast period and often drives most of the result. Learn the two methods and how sen... Read the article → Valuation4 min read Discounted cash flow (DCF) basics, step by step A DCF values a business as the present value of the cash it will produce. Follow the five steps with a worked example and see why the inputs... Read the article → Valuation4 min read Dividend yield explained, including the high-yield trap Dividend yield is annual dividends divided by price. Learn how it is calculated, why a very high yield can signal trouble, and how to test w... Read the article → Valuation4 min read Price-to-free-cash-flow and FCF yield Price-to-free-cash-flow and FCF yield measure what you pay for the cash a business has left after investment. Learn the formulas, a worked e... Read the article → Valuation4 min read Enterprise value, EV/EBITDA and EV/EBIT Learn how enterprise value is built from market cap, debt and cash, and how EV/EBITDA and EV/EBIT compare companies with different amounts o... Read the article → Valuation4 min read Price-to-book ratio: when book value is a useful anchor Price-to-book compares a stock's price with accounting net worth. Learn when book value is a meaningful anchor, such as for banks, and when... Read the article → Valuation4 min read Price-to-sales ratio: valuing companies without profits Price-to-sales compares market value with revenue. Learn the formula, how margins link it to P/E, and why a low P/S is not automatically a b... Read the article → Valuation4 min read The PEG ratio: pairing P/E with growth The PEG ratio divides a stock's P/E by its expected earnings growth. Learn how to compute it, where the rule of thumb comes from, and why it... Read the article → Valuation4 min read Forward P/E vs trailing P/E Understand how trailing and forward P/E differ, what the gap between them implies about expected growth, and how to compare them without mix... Read the article → Valuation5 min read Price-to-earnings (P/E) ratio: what it tells you and what it does not Learn how the P/E ratio is calculated, how to read it against growth and peers, and why a low or high number alone never settles whether a s... Read the article → Ratios and business quality5 min read Altman Z-Score explained: a distress warning gauge The Altman Z-Score combines five financial ratios into one number that gauges bankruptcy risk. Learn the formula, the zones, a worked exampl... Read the article → Ratios and business quality5 min read Piotroski F-Score explained: nine tests of financial strength The Piotroski F-Score awards up to nine points for improving profitability, balance sheet strength and efficiency. Learn each test, a worked... Read the article →

Educational only, not financial advice.