How to compare stocks using fundamental metrics
Putting companies from the same industry side by side helps you see which one is cheaper, which one is more profitable and which one carries more risk. No single metric decides: a company can have the lowest P/E for a good reason, such as falling earnings or high debt.
The main metrics
| Metric | Formula | Better when |
|---|---|---|
| P/E | price ÷ earnings per share | lower |
| P/B | price ÷ book value per share | lower |
| EV/EBITDA | (market cap + net debt) ÷ EBITDA | lower |
| ROE | net income ÷ shareholders’ equity | higher |
| Net margin | net income ÷ revenue | higher |
| Net debt ÷ EBITDA | years of EBITDA needed to pay off the debt | lower |
| Dividend yield | dividends per share ÷ price | higher |
| PEG | P/E ÷ earnings growth | lower |
How the scores work
For each metric, the best company in the group gets 10 and the worst gets 0; the others fall proportionally in between. The score is relative to the group: it shows who stands out among the companies you chose, not whether they are good in absolute terms. The radar chart shows each profile: one company may be cheap and indebted, another expensive and highly profitable.
Compare within the same industry
Banks, retailers, utilities and tech companies have very different multiples and margins. A P/E of 6 can be normal for a bank and extremely low for a software company. That is why you should compare businesses of the same kind.
Where to find the data
In the financial statements companies publish (investor relations websites and the securities regulator’s filing system) and on fundamental analysis platforms. Use trailing twelve months for earnings and EBITDA so seasonality does not distort the numbers.