Let’s get down to the Metrics

Share Metrics and terms you need to know about!

So, you’ve decided to make the first step and purchase your very own share of a publicly traded company. Congratulations! But, where do you actually start? Apart from the green and red candles you see on a chart, the other information presented to you when purchasing a share might be overwhelming. In this weekly blog post we will be covering some of the key metrics that you need to know.

  • Market Cap: (Share price x shares outstanding): How much 100% ownership of a publicly traded company is worth.
    • Market Cap + Net Debt = Enterprise Value
  • Beta: Common measure of the volatility of a share compared to the market. Beta aims to measure volatility and risk. Although the Beta of a share by itself is meaningless, when compared to others we start to see its value.
    • Leave the math to the geeks. All you need to know is that a Beta greater than one means that the share price is more volatile than the general market and a Beta less than one means that the share price is less volatile than the general market.
    • Value and mature shares will generally have a Beta of less than one and growth shares will generally have a Beta greater than one.
  • Earnings Per Share (EPS): In short, the EPS ratio tells you how many Rands of earnings you share has the right to. Please note that Earnings are not Dividends. Dividends are a small portion of the earnings that gets paid out to shareholders in cash. However, the share price must drop by the dividend per share that has been distributed as the company converts some of its market cap into liquid cash.
    • Net Income / Shares outstanding = EPS
  • Price to Earnings Ratio (P/E Ratio): This ratio is your one stop shop if you are looking to analyze how much you are paying for the earnings attributable to a single share of a company.
    • Price per share / EPS = Price to earnings ratio

Who are we?

Caveat Capital Management is a strategic advisory firm based in Cape Town. Caveat Capital Management specializes in structuring tailor-made investment portfolios that serve your needs now and grow with you as your needs change. Caveat works to maximize your gains and minimize the risk.

What we offer

Caveat Capital Management has a competitive fee structure that incentivizes the portfolio manager to perform and the renumeration is highly linked to the performance of the portfolio. Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA). Meaning that we have the required licensing to structure full-discretionary portfolios structured to your needs.

Disclaimer

This report does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

Information and content

The information in and content of this publication are provided by Caveat Capital Management as general information about the company and its products and services. Caveat Capital Management does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

Caveat Capital Management has taken and will continue to take care that all information provided, in so far as this is under its control, is true and correct. However, Caveat Capital Management shall not be responsible for and therefore disclaims any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon any information provided. Past performance is not an indication of future performance. Caveat Capital Management does not provide any guarantee regarding capital or performance.

Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA).