What are stock metrics?

Stock metrics are various measurements used by investors to assess the value and financial health of a company whose stock they might be interested in buying. Here are some key stock metrics discussed:

1. Price to Earnings (P/E) Ratio: This is a common metric used to evaluate the price of a company's stock relative to its earnings. It's calculated by dividing the current market price of the stock by its earnings per share.

2. Price to Sales (P/S) Ratio: This metric compares a company's stock price to its revenues, providing insights especially useful for growth companies that may not yet be profitable. It is calculated by dividing the company's market cap by its total sales or revenues.

3. Free Cash Flow: This measures the amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It's an important indicator of a company's ability to generate additional revenues.

4. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): This is a measure of a company's overall financial performance and is used as an alternative to simple earnings or net income in some cases.

5. Price to Book (P/B) Ratio: Particularly relevant for certain types of companies like insurers, this ratio compares a company's market value to its book value, providing a sense of whether a stock is undervalued or overvalued compared to its actual net assets.

Each metric is particularly suited to different types of companies and industries. For example, the price-to-book ratio is commonly used for financial firms such as insurance companies. It's crucial to choose the right metric based on the specific sector and business model of the company 1.