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MARKET RATIOS

Introduction

Share market ratios for a company provides basis of comparison within the sector and overall.

# Price multiples are ratios of a stock’s market price to some measure of value per share. A price multiple summarizes in a single number a valuation relationship to a familiar quantity such as earnings, sales, or book value per share.

# Momentum indicators relate either price or a fundamental (such as earnings) to the time series of their own past values, or in some cases to their expected value.

Market Ratios

Ratio	Calculation	Discussion
Book Value Per Share	Total Stockholders’ Equity / Number of Shares Outstanding	Equity or net assets, as measured on the balance sheet
Earnings- based Growth Models	P = kE / (r-g), where E=earnings, k=dividend payout rate, r=discount rate, & g=earnings growth rate	Valuation models that discount earnings and dividends by a discount rate adjusted for future earnings growth
Market-to-book	(Stock Price x Number of Shares Outstanding) / Total Stockholders’ Equity	Measure of accounting-based equity
Price Earnings Ratio (PE)	Stock Price / EPS	Measure of market premium paid for earnings and future expectations
Price Earnings Growth Ratio (PEG)	PE / Earnings Growth Rate	PE compared to earnings growth rates, a measure of PE “reasonableness”
Sales-to-market Value	Sales / (Stock Price x Number of Shares Outstanding)	A sales activity ratio based on market price
Dividend Yield	Dividends Per Share / Stock Price	Direct cash return on stock investment