This series follows the series about Group of financial analysis indicators and describes in detail the indicators of market value and capital market.
Investors give their money into undertakings mainly for the purpose of obtaining:
Market value indicators often use data about market value of shares and the amount of dividends in its calculations and as such bring into the financial analysis the point of view of investors who evaluate the company not only based on the current development, but also by expected future situation.
Group of indicators of market value and capital market include the following indicators:
Earnings per share (EPS) shows the amount of annual profit per a single share. It is important indicator used during investment decision-making.
* Number of share is mostly the average for the period weighted by the number of days.
EAT (PAT) is often reduced by dividends on preferred shares.
is in the use of profit that can be manipulated.
is with competitors EPS or other comparatives.
The indicator Cash-flow per share shows the amount of operating cash-flow per a single share. It is therefore similar to Earnings per share (EPS), but because it does not have profit, but cash-flow in the nominator, it general disadvantages of EPS resulting from the use of profit (especially easy manipulation).
Number of shares is often the average for the period weighted by the number of days.
is with competitors or with other comparatives.
Price to earnings ratio (P/E) is one of the indicators of market value and capital market. It indicates how much are the investors willing to pay per unit of profit.
The indicator is primary but not the only indicator used when making investment decisions.
The indicator is uninterpretable if the profit is negative.
But comparisons with companies in different industries or with past developments can be misleading.
The average value is usually about 20-25 (17), but it depends on economic conditions and the market in which the company operates.
17. Price-Earnings Ratio - P/E Ratio (online). Citation date: 7.11.2015. Available from www: http://www.investopedia.com/terms/p/price-earningsratio.asp?optm=term_v2
Indicator Dividend payout ratio expresses what proportion of profit is paid out as a dividend / profit sharing. The rest of the profit may be used by the company for further development.
If the company wants to pay a dividend, it must meet certain conditions.
Examples of reasons, when the company pays high or low dividends can be found here.
Dividend yield is one of the indicators of market value and capital market. It is an important indicator used when making investment decisions. It helps assess what annual yield (dividend) is obtained by shareholders for each unit of share value held.
is usually with other dividend yields of the same investors.
Financial analysis indicator Dividend per share presents the amount of annual dividends paid per a single share.
Important is the comparison of data in time-series. If is the trend increasing, it is expected that this trend will continue well into the future.
However, the reason for the indicator growth may not be only the profit increase, but also higher dividend payments, which was made at the expense of company's growth in the future.
Price to book ratio (P/B) or Market value to book ratio (M/B) is one of the indicators of market value and capital market. It is the ratio of the market value of shares with its carrying value. The carrying value may be measured in various ways, one of which may be shareholders' equity.
• > 1 → may indicate that the shares are overvalued
• <1 → may indicate that the shares are undervalued
The recommended value should be > 1.
Comparison of firms in different industries makes little sense, on the contrary, a comparison in the same industry is recommended.