Key Fundamental Parameters for Stock Selection
Profitability Ratios:
- EPS (Earnings per Share)
- ROE (Return on Equity)
- ROA (Return on Assets)
- ROCE (Return on Capital Employed)
- Gross Margin, Operating Margin, Net Margin
Valuation Ratios:
- P/E Ratio (Price-to-Earnings)
- P/B Ratio (Price-to-Book)
- PEG Ratio (Price/Earnings-to-Growth)
- EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization)
Growth Metrics:
- Revenue CAGR (Compound Annual Growth Rate)
- Earnings CAGR
- Dividend per share & dividend payout ratio
Leverage & Risk Ratios:
- Debt-to-Equity Ratio
- Current Ratio & Quick Ratio (liquidity measures)
- Interest Coverage Ratio
Cash Flow Metrics:
- Free Cash Flow per share
- Operating Cash Flow trends
Qualitative Factors
- Management quality & track record
- Corporate governance & transparency
- Brand value & market position
- R&D and innovation pipeline
