Researching Stocks

When researching stocks, it’s important to gather and analyze key financial data to assess the company’s performance and potential for future growth. Here are the main sources and metrics to consider:

Where to Find Information:

  1. Company Reports:
    • Public companies release quarterly and annual reports (like the Annual Report and Form 10-K) that provide financial statements, management discussions, and business outlooks. These can be found on the company’s investor relations website.
  2. Financial News Websites:
    • Our share price pages offer comprehensive financial data, including stock prices, analyst ratings, and news about the company.
  3. Stock Broker Platforms:
    • Most brokerage platforms (e.g., Hargreaves Lansdown, AJ Bell) provide financial reports, price charts, and analyst insights for each stock.
  4. Analyst Reports:
    • Subscription services (e.g., Morningstar or Reuters) offer detailed research reports, including professional analyst recommendations.

Key Metrics to Analyze:

  1. Earnings:
    • Look at the company’s earnings per share (EPS), which shows how much profit it generates for each share. Rising EPS is generally a good sign of growth.
  2. Price-to-Earnings (P/E) Ratio:
    • This ratio compares the company’s stock price to its earnings. A lower P/E might suggest a stock is undervalued, while a higher P/E could indicate overvaluation or high growth expectations.
    • P/E = Stock Price / Earnings per Share.
  3. Dividends:
    • Check the dividend yield (annual dividend payment divided by the stock price) if you’re looking for income. Stable or growing dividends can indicate a financially healthy company.
  4. Revenue Growth:
    • Track how fast the company’s revenue is growing over time, as this is a key driver of long-term stock performance.
  5. Debt Levels:
    • High debt relative to equity (debt-to-equity ratio) can be risky, especially in industries sensitive to interest rates.

Conclusion:

Use a combination of company reports, financial news websites, and broker platforms to gather key information. Focus on metrics like earnings, P/E ratio, and dividends to get a comprehensive view of a stock’s performance and potential.