What Is Fundamental Stock Analysis? Section 2
Although the raw data of the Financial Statement has some useful information, much more can be understood about the value of a stock by applying a variety of tools to the financial data.
Earnings per Share
The overall earnings of a company is not in itself a useful indicator of a share’s worth. Low earnings coupled with low outstanding shares can be more valuable than high earnings with a high number of outstanding shares. Earnings per share is much more useful information than earnings by itself. Earnings per share (EPS) is calculated by dividing the net earnings by the number of outstanding shares. For example: ABC company had net earnings of $1 million and 100,000 outstanding shares for an EPS of 10 (1,000,000 / 100,000 = 10). This information is useful for comparing two companies in a certain industry but should not be the deciding factor when choosing shares.
Price to Earning Ratio
The Price to Earning Ratio (P/E) shows the relationship between share price and company earnings. It is calculated by dividing the share price by the Earnings per Share. In our example above of ABC company the EPS is 10 so if it has a price per share of $50 the P/E is 5 (50 / 10 = 5). The P/E tells you how much investors are willing to pay for that particular company’s earnings. P/E’s can be read in a variety of ways. A high P/E could mean that the company is overpriced or it could mean that investors expect the company to continue to grow and generate profits. A low P/E could mean that investors are wary of the company or it could indicate a company that most investors have overlooked.
Either way, further analysis is needed to determine the true value of a particular stock.
Price to Sales Ratio
When a company has no earnings, there are other tools available to help investors judge its worth. New companies in particular often have no earnings, but that does not mean they are bad investments. The Price to Sales ratio (P/S) is a useful tool for judging new companies. It is calculated by dividing the market cap (stock price times number of outstanding shares) by total revenues. An alternate method is to divide current share price by sales per share. P/S indicates the value the market places on sales. The lower the P/S the better the value.
Price to Book Ratio
Book value is determined by subtracting liabilities from assets. The value of a growing company will always be more than book value because of the potential for future revenue. The price to book ratio (P/B) is the value the market places on the book value of the company. It is calculated by dividing the current price per share by the book value per share (book value / number of outstanding shares). Companies with a low P/B are good value and are often sought after by long term investors who see the potential of such companies.
Dividend Yield
Some investors are looking for shares that can maximize dividend income. Dividend yield is useful for determining the percentage return a company pays in the form of dividends. It is calculated by dividing the annual dividend per share by the share’s price per share. Usually it is the older, well-established companies that pay a higher percentage, and these companies also usually have a more consistent dividend history than younger companies.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention – Securities Based Lending.
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For those with money invested in actively traded securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
Click here for information about Securities Based Lending / Stock Loans
Why You Should Look for Stock Advice Online –
Why should you look for stock advice online? Consider overwhelming reason. In “years past”, a person looking to invest in stocks had to pay a hefty commission to a stock broker who made the transactions for them. The majority of these individuals had to rely on the broker for advice or study the stock market on their own seeking information from newspapers, magazines and the library.
Stock brokers made their money whether or not the advice they gave you was any good and the information available to the average person was not usually enough to qualify them to make good decisions, so only the rich could afford the kind of information that would make them richer.
Today, things have radically changed – we are in the “information age”. Everyone has access to a lot of top quality stock advice online. You don’t have to be an elite member of society to have a real chance of making your fortune on the stock market. Rather than blindly trusting a broker’s advice, doesn’t it make more sense to educate yourself with good stock advice online so you can make a qualified decision?
Today there is just so much information available online today that it would be entirely foolish not to take the time to educate yourself so that you can recognize the shifts and trends in the market that can make you rich. There is a wealth of information available for anyone willing to look for it.
Finding good stock advice online isn’t as difficult as you might think, either. You should look for information that teaches you how to read and analyze stock charts because these are instrumental in helping you to recognize a trend that indicates that you should buy or sell a particular stock. Once you are armed with this type of knowledge you will be much better prepared to make a healthy profit through buying and selling stocks on the stock market.
The internet is the “great equalizer” of today because so much quality information is available to everyone regardless of their race, religion or economic standing. The best stock advice online is there for the taking to anyone who will reach out their hands and grab it. Especially during these tough economic times when people need to increase their incomes more than ever, stock advice online is there to help lead the way. Of course a person still has to use that information wisely, but nonetheless, it is available for any person to study and use to make good stock purchasing decisions.
Why should you look for good stock advice online?
- 1. For starters, to help you achieve “financial independence”, and
- 2. Give you a chance to save for retirement and maybe even retire early so you won’t have to rely on your employer or the government to have any money left to give you when the time comes.
- Wealth building should be your number one reason for seeking online stock advice.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention – Securities Based Lending.
Click here for information about Non-Purpose, Non-Recourse Loans
For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
For example, CEOs, CFOs or COOs, with large publically traded companies, who have large blocks of corporate stock can leverage those assets to take advantage of investment opportunities.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
These loans are –
· Simple & Quick – NO Credit Check / NO Income Verification / NO Upfront Fees / NO Closing Costs / NO Personal Guarantee
· Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)
· Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount
· High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer
· Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended
· Low Fixed Interest Rates – usually between 2% to 4%
· Loan Term – minimum of 3 yrs; also 5 yr / 7 yr / 10 yrs
· Quick Funded – usually within 5 to 7 business days
Click here for information about Securities Based Lending / Stock Loans
Lending Trends – “Non-Recourse” / “Non-Purpose” Secured Loans
Taking advantage of current investment opportunities may be simpler and safer than you might think. You may not suffer from insomnia now because borrowing money was never that easy; the perception of world has changed today as borrowing money is not considered a taboo. Today, you may be feeling a deep monetary crunch. If so, there are various ways to dig yourself out of the financial mess or to even take advantage of financial opportunities that require quick action. One of the more comfortable ways is with a secured loan know as a “Securities Based Loan”.
A secured loan is loan that requires borrowers to offer their property as collateral. Bankers also call this an asset based loan. this reduces the risk for lenders and they charge low rates of interest. Unsecured loans, on the other hand, do not require collateral and consequently, they carry high rates of interest.
One type of secured loan you may not have considered is a securities loan where borrowers use their stocks or other securities to get non-recourse financing for any business or personal use.
As we all know that there are no free lunches in this world, but there can be affordable lunches, such as loans that use your assets in the form of a house or a car or your stock certificates as collateral. This basically means that you get cheap secured loans against the equity of your asset and if you default in paying the secured loans, the lender can liquidate your asset to recover his money.
So, what can you use secured loans for? If it’s a securities loan, this type of loan is also known as a “non-purpose loan” because it may be used for any business or personal use. Secured loans offer the benefit of borrowing with lower interest rates and lower monthly repayments as compared to unsecured loans. Securities loans are normally given with quarterly or semi-annual interest payments, however they can be structured to have no debt service payments.
In today’s world of economic uncertainties, for some it may be difficult to make ends meet, let alone save for a rainy day. For others, like corporate officers, such as the CEO or CFO of a company, who have common corporate stocks that they may not want to sell there may be a “golden opportunity” for them. These people can use their corporate stocks to take advantage of today’s Real Estate prices which are significantly reduced and may offer opportunities to purchase RE for 40% to 50% of what it was appraised for only two years ago.
On the other hand, what do you do when faced with unforeseen expenses like a medical emergency? The easiest solution to this is acquiring a secured loan, which you may use as bridge loans in an emergency. With securities, you can easily apply for a secured loan, which will not only give you some emergency cash in hand, but also a relatively low interest that you can pay back overtime.
Securities lending through ICON Commercial Lending offers the following benefits:
• Simple & Quick – NO Credit Check / NO Income Verification/ NO Upfront Fees / NO Closing Costs / NO Personal Guarantee
• Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)
• Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount
• High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer
• Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended
• Low Fixed Interest Rates – usually between 2% to 5%
• Loan Term Flexibility – minimum of 3 yrs; also 5 yr / 7 yr / 10 years
• Quick Funded – usually within 5 to 7 business days
• Borrower Maintains Beneficial Ownership – borrower keeps all upside market appreciation. In addition, borrower receives credit against their interest payment for all dividends or interest on bonds. An added benefit is that the lender is responsible for taxes on the dividends during the loan term. It is a loan (not a constructive sale) per section 1058 of the IRS Code.
• This is NOT a Margin Account Loan – A securities based loan is not a “margin account loan”. These loans have significant advantages over conventional margin loans. Here is some differences between ICON’s Securities-Based Lending and margin loans -
1. Typical Margin Loan – FULL Recourse loans — additional liability, fees, and penalties may be assessed.
ICON Securities Loan – 100% NON Recourse with NO Personal Liability; you may walk away from an ICON loan with no penalties & NO negative credit reporting.
2. Typical Margin Loan – For many brokerage houses, a credit requirement has been added as a qualifying factor.
ICON Securities Loan – ICON does NOT check your credit nor income.
3. Typical Margin Loan – 50% LTV ratio
ICON Securities Loan – Up to 80% LTV ratio; depending upon securities’ trading volume and liquidity.
4. Typical Margin Loan – Variable higher interest rates (typically 5% to 8% ARM’s)
ICON Securities Loan – Fixed lower interest rates from 2% to 5%
5. Typical Margin Loan – Not all NASDAQ, AMEX, NYSE stocks are “marginable.”
ICON Securities Loan – Loans available against all types of securities that qualify (including OTC:BB, “pink sheets”, and certain foreign exchanges).
6. Typical Margin Loan – are not allowed to lend on stocks valued at less than $10.00 per share.
ICON Securities Loan – we offer the loan on any share price.
7. Typical Margin Loan - If the share price drops below 75 percent to 80 percent of original total stock value, a margin call is initiated and may you normally have only one day to cure the default, which may result in the unwanted sale of your securities.
ICON Securities Loan – ICON has a flexible process to “cure” your loan default. ICON’s “call” is set at 80% of the loan amount (approximately 65% of the stock value) and we offer 5 days to cure the default instead of only one day. Since ICON’s loans are non-recourse loans, if the borrower cannot cure the loan default they may simply walk away.
Click here for information about Non-Purpose, Non-Recourse Loans
Technology Equipment and Software Financing
Technology equipment and software are very important for a business in today’s world.
Technological or software equipment includes new computer system, routing software, safety equipment and so on.
These types of equipment are generally very expensive and so the need for technology equipment and software financing arises. However most of the traditional lenders may not be ready to finance technological equipment or software. This is due to their inability to understand the purpose and type of this equipment. Therefore an expertise approach is required to understand the need for technological and software equipment. There are some genuine financing companies that offer help to acquire these types of equipment.
Click here for information about Non-Purpose, Non-Recourse Loans
There are various categories of technology and software equipment. Therefore various options are allowed by financial institutions to get technology equipment and financing help. Audio visual equipment is one among them which includes cameras, sound equipment and so on. This equipment is really important for companies that specialize in audio video. Seeking the financial assistance of financing companies is required due to high price tags of this equipment
Safety and security equipment is essential for certain companies. These types of equipment include metal detector, alarm equipment, closed circuit TV, digital video recording, motion detector, security gate, fire suppression and so on. These types are vitally important for maintaining the personal safety and security. Due to its highest price ranges, most of the companies could not afford to buy it. But technology equipment and software financing makes it possible for almost all companies to acquire safety and security equipment.
Telecommunication equipment helps in effective business communication. Thanks to these types of equipment, many companies are functioning properly without any communication gap. Latest telecommunication equipment is available now which helps in effective communication. Broadcasting equipment, multiplex equipment, telephone system, transmitting equipment etc are really important for a modern office. However their price ranges are extremely high making it impossible to afford for small and medium companies. Technology equipment and software financing is the only best option to meet all the essential requirements.
Computer hardware is essential for most of the companies. Since their prices come down, most of the companies can get it easily. The data storage equipment, server, work station, network etc are vitally important for any business in today’s world. But the computer hardware has undergone constant changes. When the existing hardware becomes old, you need to buy a new one. This situation calls for the help of technology equipment and software financing.
Software financing is required to acquire the latest software. The traditional lenders would not be willing to provide financial assistance to buy the software. However accounting software, ecommerce software, manufacturing software, CAD software etc are essential for the business operation of most of the companies. In fact, every company requires certain type of software. Some of the reliable financing companies recognize the need for software financing and they offer essential help.
Since there are no embarrassing procedures for getting the technology equipment and software financing help, any company can apply for the financial assistance from the valid financing company.
Click here for information about Securities Based Lending / Stock Loans
Do You Know How to Use “For Cash Advance Lending”
Cash advance loans are a handy financial product for myriad of situations. They are written for small amounts which are usually too small for a bank or an installment loan provider to lend. This makes them particularly good for emergency bills, purchases that must be made on a tight schedule or for other purposes where one needs money very quickly but where their regular paycheck is too far away for them to count on that funding. They also allow borrowers to avoid some unpleasant consequences of having too little funding at a vital time in their lives.
Click here for information about Non-Purpose, Non-Recourse Loans
One’s usual options when in these situations is to use a credit card, to tap into savings or to use a payday loan, another term for a cash advance loan. The first two options are sometimes not quite as desirable. Credit cards tend to come with a lot of hidden fees and expenses and it’s very easy to forget to pay off a debt and to let it sit on the account and collect interest which ends up in that money costing much more than its initial value. Of course, not all individuals even qualify for credit cards and this is another difficulty.
Tapping into savings has several drawbacks. For starters, it represents establishing a very bad habit. Tapping into one’s savings should always be a last resort when there are no other options available. Hitting one’s savings accounts oftentimes carries penalties that make the cash very expensive, as well. These fees are often far more than what would be charged by a payday lender to finance a small loan that allows one to get by temporarily until their regular cheek arrives. Savings should always be left alone until one is truly in a dire situation.
A payday loan usually comes at a very small financing fee. These lenders express this fee in terms of interest. The interest figure itself will often seem very high. This is because the loan is designed to be taken for a very short term which makes this necessary if the lender is to make any profit off of providing the money. Interest payments are reckoned by multiplying one’s loan amount by the interest by the time for which the loan is taken. When one does this arithmetic, it’s usually apparent that the financing charge for a payday loan is very small, indeed.
Payday loan amounts are usually convenient for expenses such as utility bills, installment loan payments or credit card payments which will fall behind if one waits for their next check to pay the debt. One will be able to borrow up to a percentage of their paycheck as determined by sate regulators and, in most cases, this total amount is more than one needs to get by for a couple of weeks.
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The Property Market and the Global Recession
Australia is one of the few countries, along with Canada, who has felt the credit crunch less than the rest of the world. There may be many reason for this, such as stricter property lending rules or because there is such a large amount of space and supply of land to be able to be used for homes that the vast increases the majority of the world saw from 2004 – 2006 did not happen.
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While Australia has not been completely sheltered by the economic downturn, it has weathered the storm quite well. There is a divide amongst experts as to how the property market will react in 2009 and 2010 in Australia. Most financial analysts tend to think that property values will fall from 5%-10%. Most agree, however, that an increase in value to the property market is not likely before 2011.
In the end, the Australian property market will be affected, either positively or negatively by four overriding factors: debt, employment, the global economy, and housing price stability. In reference to debt, the main issue that is facing the majority of Australian households is that the debt levels are at record highs. In a property market where housing prices are rising, the number of eligible buyers may drastically fall as people are financially unable to take on any more debt.
Employment is a very strong factor in whether the Australian property market will rise or fall. Unemployment rates are on the rise, but because there have been labour shortages in the mines, there has been work for those able to do manual mining labour. Unfortunately, due to the uncertainty in the economy, some businesses are protecting themselves by making full-time employees part-time, as this saves on health care and tax expenses. If the economy does not begin to strengthen, more business will have to move to measures such as this, in addition to redundancies and lay-offs.
The global economy, but specifically the economies of the US and China, needs to strengthen in order for the world to come back to financial order. Many countries are introducing stimulus plans to help revitalize their country, get spending under control, and to help bring financial strength back to their currencies. While the Australian property market will not feel the immediate affects of a strengthening US or Chinese economy, the medium term affects will help to maintain or increase property values.
In order to keep housing stability in Australia, interest rates have to remain low and repossessions must remain few. Banks that are working with their customers in order to allow them to keep their homes are helping bring back the economy. If banks repossess a majority of homes and hold on their books a large amount of overvalued, non-saleable stock, the market will surely fall.
Half way through 2009, the Australian property market has been able to maintain a solid ground. If employment can continue and the stimulus packages of other countries begin to kick in, the property market will remain strong. Although significant rises in the Australian property market should not be expected, a modest increase next year should be an attainable goal.
Click here for information about Securities Based Lending / Stock Loans