Fundamental Analysis For Beginners, Pt. 1

The Earnings Per Share (EPS) ratio measures a company's profitability by dividing its net earnings by the total number of outstanding shares. A higher EPS indicates greater earnings per individual share, signaling potential profitability.

The Price-to-Earnings (P/E) ratio, on the other hand, compares the stock price to its EPS. It helps investors gauge whether a stock is overvalued or undervalued in relation to its earnings.

A lower P/E ratio suggests the stock may be undervalued, while a higher P/E ratio may indicate an overvalued stock.

By understanding these essential ratios, investors can make informed decisions about a company's financial health and valuation, aiding in the pursuit of successful investment opportunities.

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