Stock key figures explained: P/E, dividend yield, beta and more

A share price of NOK 50 says nothing about whether a stock is cheap or expensive. Only when you relate the price to what the company earns, owns and pays out does the number mean something. That is what key figures do.

Valuation: how much are you paying?

P/E: price relative to earnings

P/E (price/earnings) is the share price divided by earnings per share. A P/E of 10 means you pay NOK 10 for every krone the company earns per year.

• A low P/E may mean the share is cheap, but also that the market expects falling earnings.
• A high P/E may mean the share is expensive, but also that the market expects strong growth.
• A negative P/E means the company is loss-making, and the figure is then of little use.

P/E should be compared within the same industry. Banks and oil companies typically have lower P/E ratios than software companies, because growth and risk differ.

P/B: price relative to book equity

P/B (price/book) is market value divided by book equity. It is especially useful for banks, insurers and property companies, where the assets on the balance sheet give a good picture of value. A P/B below 1 means the share is priced below its book equity.

EV/EBITDA: value regardless of debt

EV (enterprise value) is market value plus net debt. EBITDA is operating profit before depreciation. The ratio between them makes it possible to compare companies with different debt levels, and it is widely used for capital-intensive industries such as oil, shipping and manufacturing.

Profitability and strength

Return on equity (ROE)

Return on equity is profit divided by equity. It shows how well the company manages the owners’ money. A bank with a 12 per cent return on equity earns NOK 12 a year for every NOK 100 the owners have in the bank.

Debt ratio

The debt ratio shows how much debt the company has relative to its equity. High debt amplifies both good and bad years and makes the company more vulnerable when interest rates rise or revenue falls.

Dividends

Dividend yield

The dividend yield is the dividend per share divided by the share price. A share costing NOK 200 that has paid NOK 10 in dividends yields 5 per cent.

Payout ratio

The payout ratio is the dividend divided by earnings. It shows how much of the profit is paid out, and whether the dividend can be sustained. If it stays above 100 per cent over time, the company pays out more than it earns.

Risk

Beta

Beta measures how much the share has moved compared with the market. A beta of 1 means the share has historically moved in line with the market. A beta of 1.5 means it has swung 50 per cent more, and a beta below 1 that it has swung less. Beta is based on historical prices and can change.

Market value

Market value is the number of shares multiplied by the price. Large companies are usually more liquid and less volatile than small ones, but often also have lower growth prospects.

Overview

Using key figures in practice

1. Compare within the same industry. A P/E of 20 can be cheap for a growth company and expensive for a bank.
2. Look at the trend over time. Are earnings rising or falling? A low figure based on a peak year can be misleading.
3. Combine several figures. A low P/E, solid return on equity and moderate debt tell you more than one number alone.
4. Understand why a figure is what it is. An unusually low or high figure almost always has an explanation.

On AksjeNet, every stock page shows market value, beta, dividend history and dividend yield, together with a price chart and model signal. Here are two examples from different industries:

Equinor ASAEQNR419.40 NOK+0.4%BUYDNB Bank ASADNB304.00 NOK+0.5%HOLD

Live prices from the latest close. Signals are model-based, not recommendations.

Next steps

• See the Oslo Børs price list
• Read how AksjeNet calculates scores and signals
• Read about dividend stocks