How to Find and Invest in Good Stocks Using EPS Growth

How to find a good stock to invest in using EPS Growth

Many people think that the price of a stock tells them if it is good or bad. They think that if the price goes up, it is good. If the price goes down, it is bad.

This is not a good way to choose a stock.

You should look at something else. You should look at the EPS growth.

[1] EPS stands for: earnings per share

[2] When we buy a stock, we own a part of the company. That part is called a SHARE.

[3] If the company makes more money per share, it is good for us. We can get more money from our share.

[4] But the company should also make money in a smart way. It should not borrow too much money or spend too much money.

[5] This means that if the EPS is growing in a company/industry that is smart and profitable, then it is a good stock.

EPS Growth:

EPS growth is a crucial measure of a company’s overall success and future prospects. It displays the earnings per share of the company over a given period of time. Increased earnings and greater value creation for shareholders are shown by a higher EPS increase for the company. A lower EPS growth indicates that the business is having difficulties growing its earnings or is dealing with some difficulties.

To evaluate a stock, EPS growth by itself is insufficient. Other things to think about are as follows:

Value-to-earnings ratio, or P/E:

The market price of a stock divided by its earnings per share (EPS) yields this value. It provides you with an expense breakdown for every unit of income. P/E ratios indicate the affordability or undervaluation of a corporation; a higher ratio indicates the overpricing or high cost of the stock. You can use past trend and the industry average to compare a stock’s P/E to decide if it is appropriate.

Dividend yield:

Dividend yield is the amount of a company’s yearly dividend divided by its current market value. Stock ownership has the ability to yield earnings. Businesses with high dividend yields provide substantial dividends to their shareholders, while those with low yields reinvest their earnings to finance further growth. Try to choose stocks with a dividend yield that is either growing or steady if you want a dependable income stream that is also protected from market swings.

ROE:

A company’s net income divided by its total equity is known as its return on equity, or ROE. It reveals to you how well the business is generating profits with the capital of its shareholders. A lower ROE indicates wastefulness or loss-making, whereas a greater ROE indicates efficiency and profitability. A substantial competitive advantage and durable growth may be indicated by equities with a steadily increasing or stable return on equity (ROE).

Do you want to make money from good stocks?

Then go and check these three stocks: Kotak Mahindra Bank, HDFC Bank and Finolex. And, tell me in the comments which stocks are good and which are bad according to the EPS growth.

I hope this blog will help you. Please remember that you should conduct your own research before making any investments and that this is not financial advice. Feel free to ask me any other questions or requests you may have. 😊

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