Online web based charting provider, TradingView, announced today on its blog the addition of new instruments connected strictly with fundamental analysis. Newly presented tools work with symbols and companies from NASDAQ, AMEX and NYSE.
TradingView complements its browser based charting platform with information on market capitalization and dividends yield. In addition, the provider adds 5 indicators instructing traders about the current valuation – Price/Earnings (PE Ratio), Price/Earnings to Growth (PEG Ratio), Price/Sales (PS Ratio), Price/Book Value per share and Price/Cash Flow per share. All are displayed below the main chart, as the standard technical analysis indicators or oscillators.
PE, PEG and PS ratios are one of the simplest tools of fundamental analysis, which allow the assessment of whether the company’s shares are under or overvalued. PE ratio measures the current share price of the company relative to its per share earnings (EPS).
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However, to obtain a more detailed picture of the stock condition, it is worth reaching for the PEG ratio. In this case, the previously calculated value of the profit-to-earnings ratio is divided by annual EPS growth, which provides more accurate insight into the current shares valuation. Providing forward-front perspective, PEG is a crucial tool for investors wanting to pull out the market’s predictions for the future.
PS ratio is a very different indicator from the two previous ones – it compares the stock price with the company’s revenue. This allows traders to assess how much real worth can be found in every dollar earned during the product’s sales.
The last two indicators added by TradingView, Price/Book Value per share and Price/Cash Flow per share, are used to compare the company’s market price to its book/cash flow per share value. Low levels with these indicators suggest that the company is underestimated, while higher levels may indicate overvaluation.
It should also be noted that in the case of all ratios, their importance is much greater when set next to companies from the same industry. TradingView stresses that in the case of all above described indicators, users can enable the Trailing Twelve Months option.