Value investors actively seek stocks they believe the market has undervalued. Investors who use this strategy believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with a company's long-term fundamentals, giving an opportunity to profit when the price is deflated.
Although there's no "right way" to analyze a stock, value investors turn to financial ratios to help analyze a company's fundamentals. In this article, we'll outline a few of the most popular financial metrics used by investors.
1. Price-to-Earnings Ratio
2. Price-to-Book Ratio
3. Debt-to-Equity
4. Free Cash Flow
5. PEG Ratio
Source : Investopedia
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