Best Stock Analysis Tools for Fundamental Comparison in September 2025
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When comparing stocks using fundamental analysis, investors typically look at key financial metrics such as earnings per share, revenue growth, profitability ratios, and debt levels. They may also consider qualitative factors such as the competitive landscape, market trends, and company management. By analyzing these factors, investors can assess the intrinsic value of a stock and determine whether it is undervalued or overvalued relative to its peers. Fundamental analysis can help investors make informed decisions about which stocks to buy or sell based on their long-term growth potential and risk profile.
How to evaluate a company's operating cash flow?
- Start by reviewing the company's financial statements, specifically the statement of cash flows. This document will outline the company's cash inflows and outflows from operating activities.
- Calculate the operating cash flow by adding the net income and adjusting for non-cash expenses such as depreciation and amortization. This will give you an indication of the company's ability to generate cash from its core operations.
- Compare the operating cash flow to the company's net income. A high operating cash flow relative to net income suggests that the company is able to convert its profits into cash efficiently.
- Analyze trends in the operating cash flow over time. A consistent or growing operating cash flow can indicate a healthy and sustainable business model, while declining cash flows may raise red flags.
- Compare the company's operating cash flow to industry peers or benchmarks. This can help you assess the company's performance relative to its competitors and industry standards.
- Consider other factors that may impact the company's operating cash flow, such as changes in working capital, capital expenditures, or debt repayments. These factors can provide additional insights into the company's cash flow dynamics.
- Seek input from financial analysts or experts to gain a deeper understanding of the company's operating cash flow and its implications for the company's financial health and prospects.
How to determine a company's earnings per share growth rate?
To determine a company's earnings per share (EPS) growth rate, you can follow these steps:
- Obtain the company's EPS data: You can find the company's EPS data in its financial statements, such as the income statement. Look for the EPS figures for each year or quarter.
- Calculate the EPS growth rate: To calculate the EPS growth rate, use the following formula: EPS Growth Rate = ((Current EPS - Previous EPS) / Previous EPS) x 100
- Determine the time period for the growth rate: Decide on the time period over which you want to calculate the EPS growth rate, such as annual or quarterly.
- Calculate the average EPS growth rate: If you want to determine the average EPS growth rate over multiple periods, calculate the average growth rate by adding up all the individual growth rates and then dividing by the number of periods.
- Interpret the results: A positive EPS growth rate indicates that the company's earnings per share are increasing over time, which is generally seen as a positive sign for investors. On the other hand, a negative EPS growth rate may indicate declining earnings and could be a cause for concern.
By following these steps, you can determine a company's earnings per share growth rate and gain insights into its financial performance and potential for future growth.
How to calculate a company's free cash flow yield?
To calculate a company's free cash flow yield, you need to first calculate the free cash flow and then divide it by the market capitalization.
Here is the formula to calculate a company's free cash flow yield:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Free Cash Flow Yield = Free Cash Flow / Market Capitalization
To calculate the market capitalization, you can use the following formula:
Market Capitalization = Number of Shares Outstanding * Current Share Price
Once you have calculated the free cash flow and market capitalization, you can then divide the free cash flow by the market capitalization to get the free cash flow yield.
For example, if a company's free cash flow is $100 million and its market capitalization is $1 billion, the free cash flow yield would be:
Free Cash Flow Yield = $100 million / $1 billion = 0.10 or 10%
How to determine a company's price-to-earnings growth ratio?
To determine a company's price-to-earnings growth (PEG) ratio, follow these steps:
- Calculate the company's P/E ratio: The price-to-earnings (P/E) ratio is calculated by dividing the current share price of the company by its earnings per share (EPS). This ratio gives you an idea of how much investors are willing to pay for each dollar of earnings generated by the company.
- Determine the company's earnings growth rate: Look at the company's historical earnings growth rate over the past few years. You can find this information in the company's financial statements or analyst reports.
- Calculate the PEG ratio: Once you have the P/E ratio and the earnings growth rate, you can calculate the PEG ratio by dividing the P/E ratio by the earnings growth rate. The formula is: PEG ratio = P/E ratio / earnings growth rate
- Interpret the PEG ratio: A PEG ratio of 1 is considered fair value, with anything lower potentially indicating an undervalued stock and anything higher potentially indicating an overvalued stock. Keep in mind that the PEG ratio is just one of many metrics to consider when evaluating a company's stock. It should be used in conjunction with other financial ratios and analyses.
How to analyze a company's research and development expenses?
- Review the company's financial statements: Start by looking at the company's latest annual and quarterly financial statements. Research and development expenses should be listed on the income statement as a separate line item.
- Compare research and development expenses to revenue: Consider how much the company is spending on research and development relative to its revenue. This can provide insight into how committed the company is to innovation and growth.
- Look at historical trends: Examine how research and development expenses have changed over time. Are they increasing, decreasing, or staying relatively consistent? This can give you a sense of the company's investment in innovation and future growth.
- Benchmark against competitors: Compare the company's research and development expenses to those of its competitors. This can provide context and help you understand how the company's investment in research and development stacks up against industry norms.
- Consider the impact on future growth: Evaluate how the company's research and development efforts are likely to impact its future growth and profitability. Are they investing in innovative products and technologies that could drive future revenue growth?
- Look for any potential red flags: Keep an eye out for any unusual or concerning trends in research and development expenses. For example, a sudden decrease in spending could indicate a lack of commitment to innovation, while a significant increase could signal a risky bet on unproven technologies.
Overall, analyzing a company's research and development expenses can provide valuable insights into its commitment to innovation, future growth prospects, and overall financial health.
How to determine a company's current ratio?
To determine a company's current ratio, you need to follow these steps:
- Obtain the company's current assets and current liabilities from the balance sheet. Current assets include cash, accounts receivable, inventory, and other assets that can be easily converted into cash within a year. Current liabilities include accounts payable, short-term loans, and other debts that must be paid within a year.
- Add up all of the company's current assets.
- Add up all of the company's current liabilities.
- Divide the total current assets by the total current liabilities to calculate the current ratio.
Formula: Current Ratio = Current Assets / Current Liabilities
For example, if a company has $500,000 in current assets and $250,000 in current liabilities, the current ratio would be:
Current Ratio = $500,000 / $250,000 = 2
A current ratio of 2 indicates that the company has twice as many current assets as current liabilities, which is generally considered to be a healthy ratio. A current ratio below 1 may suggest that the company may have difficulty covering its short-term obligations.