Valuation Metrics That Will Make You a Better Investor

With these valuation metrics, look beyond price-earnings ratios to get a more nuanced picture.

A hand writes formulas on a chalkboard.
(Image credit: Getty Images)

Enterprise value. Earnings before interest and taxes. Free cash flow. Weighted thingamajig foofaraw. Okay, we made up that last one. But there are scores of investing jargon and calculations — many with off-putting acronyms — that investors can use to shed light on a stock’s valuation and outlook. 

Most investors are familiar with a few basic measures, such as the comparison of a stock’s price to the company’s per-share earnings, or price-earnings ratio (P/E). But professional investors and valuation experts encourage investors to add at least a few less-well-known data points to their tool kit.

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Kim Clark
Senior Associate Editor, Kiplinger's Personal Finance

Kim Clark is a veteran financial journalist who has worked at Fortune, U.S News & World Report and Money magazines. She was part of a team that won a Gerald Loeb award for coverage of elder finances, and she won the Education Writers Association's top magazine investigative prize for exposing insurance agents who used false claims about college financial aid to sell policies. As a Kiplinger Fellow at Ohio State University, she studied delivery of digital news and information. Most recently, she worked as a deputy director of the Education Writers Association, leading the training of higher education journalists around the country. She is also a prize-winning gardener, and in her spare time, picks up litter.