The P/E divides the price by earnings per share: how many years of earnings you pay to buy it. The higher it is, the more growth the market expects — and the pricier the stock.
Example : A P/E of 30 = you pay 30 years of current earnings.
The P/E based on NEXT year's expected earnings (not past ones). A forward P/E lower than the current P/E means earnings are expected to grow.
Example : Current P/E 40, forward 25 → strong expected growth.
PEG = P/E divided by earnings growth. It adjusts the P/E for growth: below 1 = cheap given growth, above 2 = expensive. Fairer than P/E alone.
Example : P/E 40 but +50%/yr → PEG 0.8 (cheap).
Alpha measures outperformance versus a benchmark (here, the sector). An analyst generates alpha when their picks beat their sector, not just ride the market up.
Example : Sector +10%, the pick +18% → +8% alpha.
The price an analyst expects the stock to reach within 12 months. The « median target » = the median of covering analysts' targets. Not a certainty — analysts are often wrong.
Example : Price $100, median target $130 → +30% upside.
The average analyst opinion, from « Strong Buy » to « Strong Sell ». The consensus almost never beats the market: the value is in isolating the RARE reliable analysts, not following the average.
Example : 15 buys, 2 sells → « Buy » consensus.
The company's total market value = price × number of shares. It classifies firms into large-, mid- and small-cap.
Example : Price $200 × 2B shares = $400B.
The annual dividend paid relative to the price, in %. A high yield can signal good income… or a struggling stock (yield rises as price falls).
Example : Dividend $4/yr, price $100 → 4% yield.
The compound annual growth rate: the average yearly return that, compounded, takes you from start to end value. Fairer than a simple average for long-run performance.
Example : 100 → 200 in 5 years → CAGR ≈ 14.9%/yr.
Replaying history using, at each date, ONLY the information available that day — no peeking at the future. The condition for a credible backtest.
Example : Judging a 2021 call with 2021 prices, not 2024's.