CluenexFundamental Analysis
Reading a business through its numbers: earnings, cash flow, margins and value. 32 guides, each with a short answer up top and sources at the bottom.
All guides
- Do Partnership Announcements Move a Stock? A Three-Question TestA partnership announcement can move a stock on the day, but it only changes the stock's value if it changes expected earnings. Three questions sort real news from noise: does the deal disclose dollars
- Does a Corporate Lawsuit Threaten a Stock's Value? A 4-Step TestA lawsuit threatens a stock's value only if the likely cost, or an order blocking a core product, is large compared with the company's annual profit. Check four things: probability-weighted dollar exp
- Forward P/E vs Trailing P/E: Which One Should You Use?Trailing P/E divides price by the last 12 months of reported earnings per share. Forward P/E divides price by analyst estimates for the next 12 months. Neither is better: use trailing as the factual a
- Free Cash Flow Explained: Why It Can Tell You More Than ProfitFree cash flow (FCF) is operating cash flow minus capital expenditures: the cash left after a company pays to run and maintain its business. Divide it by market value to get FCF yield. A yield near 4%
- Gross vs Operating vs Net Margin: What Each Tells YouGross margin is (revenue minus cost of goods sold) divided by revenue. Operating margin is operating income divided by revenue, and net margin is net income divided by revenue. Across large US stocks
- How to Analyze Debt: Debt-to-Equity and Interest CoverageDebt-to-equity is total debt divided by shareholders' equity, and interest coverage is operating income (EBIT) divided by interest expense. As a rough guide, coverage below 1.5x signals real strain an
- How to Compare Two Rival Companies Without Fooling YourselfCompare two companies fairly by lining up growth, margins and valuation together, using the same time period, currency and margin definition, and looking at five or more years rather than one. Any sin
- How to Evaluate a Company's Moat for Long-Term InvestingAn economic moat is a durable competitive advantage that lets a company keep earning more on its capital than competitors can. To test one, look for a source (network effects, cost advantage, switchin
- How to Read a Balance Sheet: Assets, Liabilities and EquityA balance sheet is a snapshot of what a company owns (assets), what it owes (liabilities) and what is left for shareholders (equity), where assets always equal liabilities plus equity. Check liquidity
- How to Use a Stock Screener: From Hundreds of Results to a Short ListA stock screener filters thousands of stocks down to those that meet numeric rules you set, such as market cap, debt and P/E. It narrows a list but does not say which company is a good investment. App
- Insider Buying and Selling: How to Read Form 4 FilingsInsider buying and selling means trades in a company's stock by its officers, directors and 10% owners, reported on SEC Form 4 within 2 business days. Open market buys carry the most information, sinc
- IPO Lockup Expiration: Why One Date Can Move a StockAn IPO lockup is a contract, usually lasting 90 to 180 days, that stops founders, employees and early investors from selling shares after a company goes public. When it expires, more shares can trade.
- Is a Dividend Funded by Profit or by Selling Assets?A dividend is sustainable when free cash flow (cash from operations minus capital spending) covers it, a coverage ratio of at least 1.0x, and 1.5x or more gives comfortable headroom. If the ratio is b
- Order Backlog Explained: Why It Beats a Contract HeadlineOrder backlog is the total value of contracts a company has won but not yet delivered or booked as revenue. It tells you how much future sales are already lined up, which is usually more informative t
- Price-to-Sales (P/S) Ratio Explained: When to Use It Over P/EThe price-to-sales (P/S) ratio is market cap divided by revenue over the past 12 months. It shows what investors pay for each $1 of sales. Use it when earnings are negative or unusually low, and alway
- Switching Costs: Why They Are Software's Strongest MoatA switching cost is the money, time and risk a customer takes on by leaving one product for another. Software has high switching costs because data, workflows and integrations pile up inside one syste
- Tesla vs Rivian: Why Company Life Stage Matters More Than RankTesla is a mature, profitable automaker, and Rivian is an early-stage one still losing money. P/E only works when earnings are positive, so use margins, revenue growth and cash burn to compare them. I
- The Millionaire-Maker Stock Myth: What 10 Years of Gains PredictA stock's gains over the past decade do not reliably predict its next decade. A 10x gain in 10 years is about 25.9% a year, and repeating it gets harder as a company grows. Judge the price you pay tod
- Value Trap vs Bargain: How to Tell If a Cheap Stock Is BrokenA cheap stock is a bargain if its revenue, margins and cash flow are holding up while only the price multiple fell. It is a value trap if those numbers are shrinking, because the low multiple is then
- What an Analyst Buy Rating Is Worth and How to Read ItAn analyst rating is one brokerage or bank's published opinion, usually Buy, Hold or Sell, on how a stock may perform over about 12 months. Buy ratings far outnumber Sell ratings, so a Buy tells you l
- What is a Stock Buyback and How It Affects Share Price and EPSStock buyback = company repurchases its own shares, reducing float. Effect: EPS rises (same earnings ÷ fewer shares). Share price typically increases as supply shrinks. S&P 500 companies repurchased $
- What Is a Stock Split? Why It Does Not Make You RicherA stock split multiplies the number of shares and divides the price per share by the same ratio, so the total value of your holding does not change. A 3-for-1 split turns 100 shares at $150 into 300 s
- What Is an Analyst Price Target and Should You Trust It?An analyst price target is a Wall Street analyst's estimate of where a stock will trade in about 12 months, usually built by multiplying forecast earnings per share by a chosen P/E multiple. It is an
- What Is an IPO: How the Price Gets Set and Who Gets SharesAn initial public offering (IPO) is a company's first sale of shares to the public, after which the stock trades on an exchange. The offer price is set by the company and its underwriters from institu
- What Is EBITDA and How Do Analysts Use It to Value Stocks?EBITDA is earnings before interest, taxes, depreciation and amortization: net income plus those four items. Analysts divide enterprise value by EBITDA (EV/EBITDA) to compare companies with different d
- What Is in a 10-K and How Much Should You Trust ItA 10-K is the annual report a US public company files with the SEC, covering its business, risks, management's discussion and audited financial statements. The CEO and CFO must certify it, so it is mo
- What Is Revenue Guidance and Why Do Stocks React to It?Revenue guidance is a company's own public forecast of its sales for an upcoming quarter or year, usually given as a range. Stocks often move more on guidance than on reported results because prices r
- What Is the PEG Ratio? How It Adjusts P/E for GrowthThe PEG ratio equals a stock's P/E ratio divided by its expected annual earnings growth rate in percent. A PEG near 1.0 is the traditional rule of thumb for a fair price relative to growth, but it is
- Why a Takeover Target's Stock Jumps and What Happens to the BuyerA takeover target's stock jumps because the buyer offers a premium, often 20% to 40% above the prior price, and the stock then trades just below the offer until the deal closes. The buyer's stock can
- Why Apple Is Worth More Than Samsung: Market Cap ExplainedMarket capitalization is share price multiplied by shares outstanding. It reflects what investors expect a company to earn for shareholders over time, not what it owns. Apple has been worth a multiple
- Why Customer Churn Moves a Stock More Than Quarterly ProfitA stock price reflects expected future profit, not last quarter's profit. Churn, the share of customers who cancel in a period, sets how long revenue lasts: at 2% monthly churn the average customer st
- Why Profit Can Rise While a Stock Price FallsA stock price is roughly earnings per share times the P/E multiple, so the price falls whenever the multiple shrinks by a larger percentage than earnings grow. This is called multiple compression. For