Let’s talk fundamentals. Fundamental Analysis helps you to build a better understanding of the project/token you're looking to invest in. Learn what is is, how to use it and the various methods you can adopt ⤵️
for insights in fundamental analysis – there are a handful of FA-specific indicators that are used instead. In this section, we’ll discuss some of the most popular ones.Earnings per share is an established measure of a company’s profitability, telling us how much profit it makes for each outstanding share. It’s calculated using the following formula:Suppose that a company doesn’t pay out dividends, and its profit is $1 million. With 200,000 shares issued, the formula gives us an EPS of $5.
Many use the price-to-earnings ratio to determine whether a stock is overvalued or undervalued . It’s a good idea to take the number into account by comparing it with the P/E ratio of similar businesses. Again, this rule doesn’t always hold true, so it’s best used alongside other quantitative and qualitative analysis techniques.The price-to-book ratio can tell us about how investors value the company in relation to its book value.
A limitation of the price-to-book ratio is that it’s better suited to the assessment of “asset-heavy” businesses. After all, companies with little physical assets do not feature often in the ratio.Price/earnings-to-growth ratio is an extension to the profit-to-earnings ratio, expanding its scope to take growth rates into account. It uses the following formula:The earnings growth rate is an estimate of the predicted growth in earnings for the company in a set time frame.
The PEG ratio is favored over the P/E one by many, as it considers a fairly important variable that P/E omits.Fundamental analysis and cryptocurrencies
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