SHOP Shopify Inc.

Capital-structure-agnostic valuation multiple. Useful for comparing levered companies because it adds debt and removes cash from the numerator and uses pre-interest, pre-tax, pre-depreciation earnings in the denominator.

Valuation expressed against the cash actually available to all capital providers. Often more honest than EV/EBITDA when capex is meaningful relative to D&A.

Adjusts the numerator for debt and cash so heavily-levered or cash-rich companies are comparable. Particularly useful for cross-industry valuation work.

The multiple equity analysts most commonly quote because it reflects expected earnings rather than the trailing window. Same caveats as trailing P/E - a depressed multiple may be a value trap if forward earnings are too optimistic.

Capital-structure-agnostic earnings yield. Pairs with Greenblatt ROC to compute the Magic Formula rank (the universe-rank of EY plus universe-rank of ROC). Pre-tax operating earnings divided by the full claim on the firm.

How many dollars of book equity each share represents. Useful for asset-heavy businesses (banks, industrials) where book value approximates liquidation floor; less informative for asset-light franchises whose value is in intangibles.

Multiple of trailing-twelve-month earnings the market has assigned to the company. Lower means cheaper relative to current earnings power, but a single low P/E can also mean the market expects earnings to fall.

Useful when earnings are negative or noisy (early-stage companies, restructurings). Works best within an industry because gross margin profiles vary wildly.

Sanity-check on earnings quality. Persistently below 1 means working capital or capex is consuming earnings; persistently above 1 is unusual and may flag accounting conservatism or non-cash drags.

Easier to compare than operating_margin across firms with very different leverage / depreciation profiles. Software platforms commonly run above 30%; capital-light service businesses cluster around 20%.

FCF the business throws off relative to what you pay for the equity. Treats the equity as a perpetual claim on cash. Cyclicals can swing below zero in a downturn.

Joel Greenblatt's reformulation of return-on-capital that excludes goodwill, acquired intangibles, and financial assets, focusing instead on the tangible operating capital that actually generates EBIT. Pairs with Greenblatt's Earnings Yield (EBIT/EV) to produce the Magic Formula rank.

Pre-capex version of cash conversion. Numbers persistently below 1 suggest accruals are doing the work; numbers persistently above 1 are a (mild) positive sign.

Captures the leverage between revenue and operating profit. Core test of whether a business converts sales into income at the operating level.

Pre-tax cousin of ROIC using operating capital employed (long-term debt + equity ≈ total assets less current liabilities). Damodaran publishes ROCE by industry, so it benchmarks cleanly.

Headline profitability metric. High ROE compounds book value if the business can reinvest at the same return. Beware of buybacks artificially inflating ROE by shrinking the denominator.

Measures how productive the actual operating capital base is, independent of capital structure. The benchmark is the company's cost of capital - sustained ROIC above WACC creates value, below WACC destroys it.

Bottom-line growth on a per-share basis, capturing both operating progress and any net buyback effect. The denominator uses absolute prior EPS so a turnaround from negative to positive earnings reads with the conventional sign.

Strips out receivables and inventory, leaving only cash and equivalents over current liabilities. Stress-tests whether the business can meet obligations even if collections seize up.

Whether the company can cover near-term obligations from near-term assets. Below 1.0 doesn't mean insolvent (cash flow can cover the gap) but is worth a closer look.

The acid-test variant of current ratio strips inventory from current assets, since inventory can be stale or written down before it becomes cash. Sweet spot 1.2x; below 0.5x signals liquidity stress, above 3x signals trapped working capital.

Lets you compare equity earning power directly to bond yields. A 6% earnings yield is the equity-side analog to a 6% coupon, with the difference being earnings can grow (or contract).

Buys oversold pullbacks within an established uptrend (price above the 200-day SMA). Holds while RSI(2) is below an exit threshold; exits when RSI(2) crosses above 60.

+1 when price is above regime_ma and RSI(2) drops below oversold; held while inside the trade; back to 0 when RSI(2) crosses above exit.

+1 = pullback-buy state active, 0 = flat. Bear-side variant uses the symmetric short rule.

Compares price pivots against the MACD histogram (MACD line minus signal line) at those same bars. Bullish divergence: price lower-low, histogram higher-low. Bearish divergence: price higher-high, histogram lower-high.

+1 at right-hand pivot of bullish divergence; -1 at right-hand pivot of bearish divergence; 0 otherwise.

+1 = bullish divergence, -1 = bearish divergence.

Fires on the bar where the MACD line (EMA12-EMA26) crosses through the signal line (EMA9 of MACD). Bullish when MACD crosses up through signal, bearish when it crosses down. Far more commonly used as a trade trigger than divergence (see macd_divergence for the slower confirmatory tell).

+1 on bullish cross (MACD crosses up through signal); -1 on bearish cross (MACD crosses down through signal); 0 otherwise.

+1 = bullish MACD-signal cross, -1 = bearish MACD-signal cross.

Bullish when %K crosses above %D while both lines are below the oversold threshold; bearish when %K crosses below %D while both are above overbought.

+1 on bullish cross in oversold; -1 on bearish cross in overbought; 0 otherwise.

+1 = oversold bullish cross, -1 = overbought bearish cross.