Many of the ratios we mentioned in the previous Bite require you to calculate by looking through financial statements. Boring, right? Well at Bumper, we try to make it easier by providing you with several key statistics to quickly evaluate a stock. These metrics do not provide full clarity to make investment decisions but can give you a glimpse underneath the hood.
Key stats are provided for every stock on the Bumper platform and are located below a stock’s chart. The following ratios are available:
We covered market cap in a previous Bite. To review, it is the size or total worth of a company. Then you already know what today's low and high mean, so let’s dive into the rest.
Volume, in terms of the stock market, refers to the number of shares traded over a period of time. A higher average volume would indicate that the stock is potentially more volatile and liquid. Volatile stocks come with higher risk since the stock’s value can fluctuate more unexpectedly.
The 52-week high and low are similar to today’s high and low, but provide a longer-term perspective of a stock’s highs and lows. Why 52-weeks you might ask. Well, 52-weeks equals one year. By looking at this stat you can gain an understanding of where the stock stands over the past year. It might show that it is breaking new highs or setting lower lows.
Onto earnings per share or EPS for short. You will hear about this one a lot. This stat is as it sounds, it is how profitable a company is per share. For example, if Bank of America’s EPS is $1.62, that would mean for each share of the company’s stock the company has made $1.62. Although it might be desirable for a company to have a high EPS, an EPS that is too high can indicate the stock is overvalued.
Another popular one we have on the list is the price-to-earnings ratio, more frequently called the P/E ratio. This ratio is often utilized as a comparison to other companies in the same industry. It indicates a company’s market price relative to its earnings per share. A company with a lower P/E ratio can suggest it is a better value since you are paying less per dollar of a company’s earnings. However, there are many factors at play that you have to consider, like growth opportunities or new products.
You have the keys now. Start examining what’s underneath the hood and take a test drive! When you get back, we will jump into benchmark analysis.