Investing in stocks requires careful analysis of financial data to find out a company's true worth. However, an easier way to find out about a company's performance is to look at its financial ratios.
Two commonly used financial ratios used in the valuation of stocks are -
Price to Earnings Ratio (P/E) - It compares the company's stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.
To find stocks with favorable P/E Ratios, check out our list of steel stocks according to their P/E Ratios.
Do keep in mind that in case of cyclical stocks like steel stocks, sometimes a lower P/E ratio may not signal a cheap stock...it could among other thing be signalling peak earnings which are usually seen at the top of the steel sector cycle.
Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.
To find stocks with favourable P/BV Ratios, check out our list of steel stocks according to their P/BV Ratios.