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Author Bart Bregman

Bart Bregman

Author & Financial Analyst: 9 Years of full-time trading experience. "There is no such thing as a bad trade."

Disclaimer: The information provided on this blog should not be seen as financial advice, and is only intended for entertainment and informational purposes.

Top 5 Metrics to Analyze – Picking Individual Stocks on eToro

After learning about the strategy and considerations for picking individual stocks on eToro in our previous article, it’s time to dive into the crucial metrics that will guide your investment decisions.

πŸ’‘ Key Takeaways

β†’Consider diversifying your portfolio with a mix of dividend, blue-chip, and growth stocks.
β†’Explore different approaches: follow gurus, develop your understanding, or dig into individual companies.
β†’Analyze stock metrics and compare them to your criteria before investing.
β†’Key stock metrics to consider include Price-Earnings (P/E) Ratio, Earnings Per Share (EPS), Dividend Yield, Company History and Strength, and Debt-Equity Ratio.

stock picking metrics

Table of content

  • πŸ“Š The Top 5 Metrics for Stock Picking Success
  • 1.Price-Earnings (P/E) Ratio: The Valuation Yardstick πŸ“
  • 2. Earnings Per Share (EPS): The Profitability Indicator πŸ’°
  • 3. Dividend Yield: The Income Gauge πŸ’΅
  • 4. Company History and Strength: The Competitive Landscape 🏭
  • 5. Debt-Equity Ratio: The Financial Health Thermometer 🌑️
  • GENERAL RISK WARNING
  • Author & Expert Trader - Financial Analyst :

πŸ“Š The Top 5 Metrics for Stock Picking Success

While numerous parameters exist for evaluating stocks, we’ve narrowed down the list to the five most important metrics.

Searching for the Stock on eToro

To view these metrics on eToro, navigate to your desired stock and select the ‘Stats’ tab.

Navigating to the Stats Page of Stock

1.Price-Earnings (P/E) Ratio: The Valuation Yardstick πŸ“

The Price-Earnings (P/E) Ratio measures a stock’s market value in relation to the company’s earnings (See image 1 below). Calculated by dividing the stock’s price by the company’s earnings per share, the P/E ratio is often used to compare organizations within the same industry or sector. It can provide insights into the relative value of a stock.PE Ratio of The Stock

2. Earnings Per Share (EPS): The Profitability Indicator πŸ’°

Earnings Per Share (EPS) is a metric that describes a company’s profitability on a shareholder level (See image 2 above). It represents the ratio of the company’s adjusted income (net income minus preferred dividends) to the outstanding shares. By excluding preferred dividends, EPS assesses the income available to common shareholders, allowing for the comparison of companies of various sizes.EPS for the Stock

3. Dividend Yield: The Income Gauge πŸ’΅

Located at number 3 in the image above, Dividend Yield is an important metric for income-focused investors. Stable companies with a history of increasing dividend payouts are often considered attractive investments. However, beware of extremely high dividend yields, as they may indicate a company’s preference for sharing profits over investing in growth. Dividend yields can vary significantly across industries, so it’s essential to compare companies in the same sector.Dividend Yield of the Particular Stock

4. Company History and Strength: The Competitive Landscape 🏭

Analyzing a company’s history and strength involves assessing its industry, competitive position, and performance over time. Begin by examining the stability and growth potential of the industry in which the company operates. Then, determine whether the company is doing well and if it holds a competitive advantage. Comparing companies of similar size, using market capitalization as a benchmark, can provide additional insights.

5. Debt-Equity Ratio: The Financial Health Thermometer 🌑️

Debt is a common feature for most companies, but it’s essential to ensure they have sufficient assets and equity to back it up. The Debt-Equity Ratio measures the ratio of a company’s total liabilities to its shareholder equity. In some cases, a Debt-to-Assets Ratio is calculated, which is similar to the Debt-Equity Ratio. It’s important to compare these metrics within the context of the company’s industry, as acceptable levels can vary significantly.

In the next part of this series, we will talk about how to analyse these metrics in-depth and apply them with active and passive investing. Now that you know what metrics to look at, feel free to try your hand at investing in them on theΒ eToro Demo Practice Account.


This Article is Part of A Total guidance list on How to pick individual stocks, make sure you go by the article one by one to get a bigger understanding of the total picture. πŸ˜‰
  • How to Pick an individual stock Part 1 - The Strategy
  • How to Pick an individual stock Part 2 - 5 metrics to look at when stock picking
  • How to Pick an individual stock Part 3 - P/E Ratio (Price-Earnings ratio)
  • How to Pick an individual stock Part 4 - Earnings Per Shareβ€Ž
  • How to Pick an individual stock Part 5 - Dividend Yield
  • How to Pick an individual stock Part 6- Company History And Strength
  • How to Pick an individual stock Part 7- Debt-Equity Ratio

Support us by using the eToro sign-up form down below.⬇️

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GENERAL RISK WARNING

  • β–ΈeToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
  • β–ΈCFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
  • β–ΈPast performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
  • β–ΈCopy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
  • β–ΈCryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
  • β–ΈeToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.
  • Be warned!


Author & Expert Trader - Financial Analyst :

Bart Bregman
My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/

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