GME

What it would cost to take over the entire firm (equity plus debt, less cash) per dollar of pre-interest, pre-tax, pre-depreciation operating earnings. Capital-structure-agnostic — directly comparable across heavily and lightly levered businesses, which a P/E can't do. The weakness: EBITDA ignores capex, so capital-intensive businesses look artificially cheap on this metric. Cross-check with EV/FCF when capex is meaningful.

Adjusts the numerator for debt and cash so heavily-levered or cash-rich companies become comparable on a revenue-multiple basis. Particularly useful for cross-industry valuation work where some firms run net cash and others carry meaningful debt loads. Same caveats as P/S: best read alongside gross margin to translate the multiple into expected steady-state earnings power.

The multiple equity analysts most commonly quote because it reflects expected earnings rather than the trailing window. Same caveats as trailing P/E plus one extra: the denominator depends on consensus estimates, which can be systematically optimistic going into a downturn or pessimistic at a cyclical trough. Worth cross-checking against trailing P/E and sell-side estimate trend.

An ABSOLUTE intrinsic-value signal, distinct from the relative multiples (PE, EV/EBITDA) which only compare a stock to its industry peers. Intrinsic value comes from the Residual Income Model: book value plus the present value of the residual income (earnings above a charge for the cost of equity) the firm is forecast to generate. This is the best-VALIDATED absolute value signal in the academic literature (Frankel & Lee 1998, replicated through 2026): the value-to-price ratio robustly predicts 1-3 year cross-sectional returns, survives every major factor model, and subsumes book-to-market. Because it is scored across the WHOLE universe (not within-industry), it complements the relative multiples rather than double-counting them. Pair it with a quality screen (Piotroski) to avoid value traps, and read the EPV decomposition to see whether a discount is unpriced earnings power or just speculative growth coming out of the price. One caveat: the model anchors on book equity, so for low-book, buyback-heavy, or asset-light firms (think Apple or Coca-Cola) book is a poor floor and the model can read durable franchises as wildly overvalued. Readings are clamped, and the metric is currently shadow-scored — shown for context, with zero weight in the fundamentals grade — pending validation.

Useful when earnings are negative, noisy, or one-time-distorted (early-stage growth, restructurings, cyclical troughs). Works best within an industry, not across — gross margin profiles vary so wildly that 1x P/S for a software company means something completely different from 1x P/S for a grocery chain.

Divides the trailing P/E by the year-over-year EPS growth rate (in percentage points). Below 1.0 is conventionally read as 'cheap relative to growth'; above 2 implies the multiple is well ahead of recent growth. Sensitive to which growth window you choose and unstable when earnings cross zero — flips sign or explodes when prior EPS is negative.

Productivity of the asset base — how efficiently the firm converts assets into sales. Combined with net margin, this is the core of the DuPont decomposition: ROA = net margin × asset turnover. Two businesses can land at the same ROA via opposite paths: thin-margin / high-turnover (Costco, supermarkets) vs. fat-margin / low-turnover (luxury, software).

Sanity-check on earnings quality — a ratio of 1.0 means every dollar of GAAP earnings shows up as free cash flow. Persistently below 1.0 means working-capital build or capex is consuming earnings; persistently above 1.0 is unusual and may flag accounting conservatism (heavy non-cash charges) or a one-time release. Trend matters more than absolute level.

First-line profitability measure — how much revenue is left after the direct cost of producing it. Stable or rising gross margin signals pricing power and low input-cost exposure; falling gross margin is one of the earliest reliable signals of competitive pressure or commodity-input squeeze. Industry context is everything: 30% gross margin is excellent for a grocery chain and disastrous for a software company.

Pre-capex version of cash conversion: compares operating cash flow directly to net income, before subtracting capex. Numbers persistently below 1.0 suggest accruals are doing the work (revenue recognised before cash collected, or expenses deferred). Numbers above 1.0 are typically driven by D&A exceeding true economic depreciation — a mild positive sign but not always meaningful.

Captures the leverage between revenue and operating profit — the core test of whether a business converts sales into income at the operating level. Independent of capital structure (excludes interest) and tax-jurisdiction noise. Trend matters as much as level: an improving operating margin indicates pricing power or operational efficiency gains; a falling margin signals input-cost pressure, wage inflation, or competitive erosion.

The headline profitability metric. Net income divided by average book equity tells you how productive each dollar of shareholders' capital is. High sustained ROE compounds book value when the business can reinvest at a similar return. Two warnings: ROE rises mechanically with leverage (high D/E inflates ROE without making the business better), and aggressive buybacks can shrink the equity denominator faster than they shrink earnings, artificially boosting ROE even as fundamental returns are flat.

Measures how productive the actual operating capital base is, independent of capital structure. Strips out the effects of cash, leverage, and below-the-line items so you see the underlying economic engine. The benchmark is the firm's weighted-average cost of capital (WACC) — sustained ROIC above WACC creates value, sustained ROIC below WACC destroys it. The single most important profitability metric for long-term compounding.

Top-line growth — the cleanest way to see whether the franchise is expanding. Best read alongside margin trend: revenue rising while margin compresses is often discount-driven volume rather than real growth, and can mask underlying weakness. Compare to industry peers — what looks weak in absolute terms can be best-in-sector if the industry is contracting.

The single best operations-quality metric. Negative CCC means the firm is funded by suppliers — the customer pays before the supplier needs to be paid (Apple, Costco, Amazon at scale). Long CCC ties up working capital and forces operating-loan dependence. Combines three sub-metrics: days inventory outstanding, days sales outstanding, days payable outstanding.

DuPont productivity measure. Combined with margin, it tells the asset-light vs. asset-heavy story: low turnover with high margin is the luxury / branded model, high turnover with thin margin is the supermarket / discount model. Very high turnover in retail can also flag stockouts (lost sales) — the metric reads best industry-relative, not absolute.

Net income divided by market cap, expressed as a percent. 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 that earnings can grow (or contract) while a bond coupon is fixed. The standard 'is the equity risk-premium adequate?' framing.

TRIX is the one-bar rate of change of a triple-exponentially-smoothed closing price. The triple smoothing strips out short-term noise, so TRIX oscillates slowly around zero. A cross up through zero marks momentum turning positive (bullish); a cross down through zero marks it turning negative (bearish). Smoother and lower-frequency than most momentum oscillators, which trades responsiveness for fewer whipsaws.

+1 while TRIX is above zero; -1 while TRIX is below zero; 0 only at exactly zero.

+1 = TRIX turned positive (bullish momentum), -1 = TRIX turned negative (bearish momentum).