Price-to-book ratio:
P: represents the company's market value B: represents
the company's net assets
P/B = company 's market value/company's net assets A company's liabilities: loans owed to the bank, corporate bonds issued, etc., if the debt is 300,000 yuan, then the company's net assets will be: 700,000 yuan.
Let's go back to P/B again. Its technical term is price-to-book ratio. To illustrate, let's give a specific example: For example, if a company's market value is 100,000 yuan and its net assets are 50,000 yuan, then the market The net rate is 2. Another company has a market value of 500,000 yuan and a net asset of 100,000 yuan, so the price-to-book ratio is 5. The lower the price-to-book ratio, the greater the investment value;
However, the price-to-book ratio is used for cyclical industry indexes and small-cap stocks with unstable profits, which just makes up for the lack of price-earnings ratio! The P/B percentile is also the same as the P/E market
P/B percentile has a measurement standard:
low valuation: P/B percentile is lower than 25%
normal valuation: P/B percentile is between 25% and 80% high valuation: P/B percentile Percentile above 80%
P/E Ratio
P: indicates the company's market value
E: indicates the company's annual profit
P/E = the company's market value The company's annual profit
In terms of professional terms in the industry, P/E means the price-earnings ratio. In order to better explain this price-earnings ratio, let’s use a practical example to illustrate:
For example, if you currently open a clothing store with a market value of 200,000 yuan and an annual profit of 20,000 yuan, then the price-earnings ratio of the clothing store is 20/2 equals 10, then it What does it mean? It means that if you invest in my clothing store, you can pay back in 10 years!
For comparison, suppose another clothing store has a market value of 500,000 yuan and an annual profit of 20,000 yuan, then its The price-to-earnings ratio is 25, which means that if you invest in this clothing store, it will take 25 years to return the capital.
Judging from the above comparison, if you have money and just want to invest, you will definitely choose to invest in the first clothing store. It will pay off quickly, right? So we can draw a conclusion from it:
the lower the price-earnings ratio, the higher the investment value The higher
the price-earnings ratio, the lower the investment value
Note: This investment method is equally applicable to index funds and stocks. Why do you say that, because the index fund itself is composed of many stocks
dividend yield
It indicates the proportion of a company's annual dividend distribution to the company's total market value. For example, if the total market value is 1000, and this year's dividend is 5 yuan, then its dividend rate is: 5 divided by 1000 equals 0.5%; so in other words, it is popular In easy-to-understand terms, the higher the dividend rate, the more dividends the company pays