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8. Fundamental Basics
EPS, P/E ratios, and catalysts. Learn what moves the market fundamentally.
Beyond the Chart
While charts show what is happening now, fundamentals show why it might be happening over the long term.
- EPS (Earnings Per Share): The company's profit divided by outstanding shares. The standard metric of profitability.
- P/E Ratio (Price-to-Earnings): The stock price divided by EPS. A P/E of 20 means investors are paying $20 for every $1 of profit the company generates. High P/E implies growth expectations.
- Catalysts: Events that dramatically change a company's valuation. Examples: Earnings reports, FDA approvals, CEO changes, macroeconomic data (like the CPI/Inflation report).