Top Financial Indicators/Metrics to Consider When Investing in Stocks

When it comes to finding great performing stocks, there are several key metrics and criteria to consider. In this post you can learn about some top metrics like ROIC, Profit margi, and sales growth etc. Here is a more detailed explanation of each of the criteria:

ROIC > 15%: 

ROIC stands for return on invested capital, which is a measure of how efficiently a company is using its capital to generate profits. A ROIC of 15% or higher suggests that a company is generating strong returns on the capital it has invested, which is a good sign for long-term investors.

Profit margin > 10%: 

Profit margin is a measure of how much profit a company is making relative to its revenue. A profit margin of 10% or higher indicates that a company is earning a healthy amount of profit on its sales, which is another positive sign for investors.

Revenue growth past 5 years > 7%: 

Revenue growth is a key driver of a company's long-term success. A growth rate of 7% or higher over the past 5 years suggests that a company is able to consistently increase its sales, which is a good sign for investors looking for growth opportunities.

EPS Growth past 5 years > 10%: 

EPS (earnings per share) growth is a measure of how much a company's profits are growing on a per-share basis. A growth rate of 10% or higher over the past 5 years indicates that a company is able to consistently increase its earnings, which is another positive sign for investors.

CEO Tenure > 10 years: 

CEO tenure is a measure of how long the current CEO has been in their position. A CEO who has been in their role for more than 10 years suggests that they have a deep understanding of the company and its operations, which can be beneficial for long-term investors.

Insider ownership > 5%: 

Insider ownership refers to the percentage of a company's shares that are owned by insiders, such as the CEO or members of the board of directors. A high level of insider ownership (5% or higher) suggests that these individuals have a vested interest in the company's success, which can be a positive sign for investors.

Of course, these criteria should not be the only factors considered when evaluating potential investment opportunities. It's important to conduct thorough research and analysis of a company's financials, industry trends, competitive landscape, and other factors that could impact its long-term performance.

That's it for this quick read. In the coming posts we will learn each metric in more detail. Happy learning. 

Disclaimer : The information provided on the above topic is for educational purposes only and should not be considered as investment advice. The metrics and factors discussed, such as ROIC, profit margin, revenue growth, EPS growth, CEO tenure, and insider ownership, are commonly used in investment analysis, but they should not be the sole basis for making investment decisions. Investing involves risks, and it's important to do your own research and consult with a financial advisor before making any investment decisions. Every individual's financial situation and investment goals are unique, and a financial advisor can help you assess your risk tolerance, investment horizon, and overall financial plan. Therefore, it's important to consult with a qualified financial advisor before investing in any stocks or securities. The above information is not intended as a recommendation to buy or sell any securities, nor is it a guarantee of future performance. The past performance of any stock or security is not indicative of future results, and there is always the risk of loss when investing in securities.