Fundamental Analysis For Beginners, Pt. 2

The Price/Earnings to Growth (PEG) ratio assesses a stock's valuation relative to its earnings growth rate.

It combines the P/E ratio with the company's expected earnings growth, providing insights into whether the stock is reasonably valued based on its growth potential. A PEG ratio close to 1 is often considered favorable.

The Price/Sales (P/S) ratio compares a company's market capitalization to its total revenue. This ratio helps investors assess a stock's value relative to its sales, indicating whether the stock is overvalued or undervalued in comparison to its revenue generation.

Incorporating the PEG and P/S ratios alongside other valuation metrics enables investors to make comprehensive assessments of potential investments, empowering them to navigate the market with greater acumen and make well-informed decisions.

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