Investing glossary
Investing Glossary
The investing and valuation terms behind every Market Lens report — defined in plain English, with no jargon and no sales pitch. Educational research, not advice.
29 terms, defined in plain English
Alpha
Return above what the market alone would explain.
Read the definition →Beta
How much a stock tends to move relative to the overall market.
Read the definition →Circle of Competence
Sticking to businesses you can genuinely understand.
Read the definition →Cost of Equity (CAPM)
The return investors expect for owning a stock — used to discount future cash.
Read the definition →Current Ratio
A quick check on whether a company can cover its short-term bills.
Read the definition →Debt-to-Equity Ratio
How much a company relies on borrowing versus owners’ capital.
Read the definition →Discounted Cash Flow (DCF)
A way to estimate a company’s value from its future cash, in today’s dollars.
Read the definition →Dividend Yield
A stock’s annual dividend as a percentage of its price.
Read the definition →Earnings Per Share (EPS)
A company’s profit divided by its number of shares.
Read the definition →Economic Moat
A durable competitive advantage that protects a company’s profits.
Read the definition →Enterprise Value
The value of a whole business — equity plus debt, minus cash.
Read the definition →Free Cash Flow
The cash a company has left after running and maintaining the business.
Read the definition →Free Cash Flow Yield
Free cash flow as a percentage of a company’s market value.
Read the definition →Graham Number
A rough fair-value estimate for asset-heavy, defensive businesses.
Read the definition →Gross Margin
Revenue left after the direct cost of making a product or service.
Read the definition →Intrinsic Value
An estimate of what a business is actually worth, apart from its share price.
Read the definition →Margin of Safety
The cushion between a stock’s price and its estimated intrinsic value.
Read the definition →Market Capitalization
The total market value of all of a company’s shares.
Read the definition →Maximum Drawdown
The largest peak-to-trough drop an investment has suffered.
Read the definition →Net Profit Margin
The share of revenue a company keeps as bottom-line profit.
Read the definition →PEG Ratio
A P/E ratio adjusted for how fast a company is growing.
Read the definition →Price-to-Book Ratio (P/B)
A stock’s price compared to its net assets on the books.
Read the definition →Price-to-Earnings Ratio (P/E)
A stock’s price divided by its earnings per share.
Read the definition →Return on Equity (ROE)
How much profit a company earns on shareholders’ money.
Read the definition →Return on Invested Capital (ROIC)
How much profit a company earns on the money invested in the business.
Read the definition →Sharpe Ratio
Return earned for each unit of risk taken.
Read the definition →Sortino Ratio
Return per unit of downside risk, ignoring good volatility.
Read the definition →Terminal Value
The estimated value of all a company’s cash flows beyond the forecast period.
Read the definition →Volatility (Standard Deviation)
How much an investment’s returns bounce around over time.
Read the definition →
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