A path of 12 short lessons · 36 min in all

How to value a stock

One number at a time, on one small lemonade company. Then all of them together.

1. 1Price is what you payA share is a slice of a business. Its price is only half the story.2 min
2. 2The P/E ratioHow many years of profit the price buys you.3 min
3. 3EV/EBIT: the whole businessDebt is part of the price, even if the share price hides it.3 min
4. 4Free cash flowProfit is an opinion. Cash is a fact.3 min
5. 5Return on capitalHow much profit each dollar in the business earns.3 min
6. 6MarginsHow much of every dollar of sales the business keeps.2 min
7. 7How much debt is too much?Borrowing makes good years better and bad years deadly.3 min
8. 8What is already in the priceEvery price makes a quiet bet on the future.3 min
9. 9Buybacks and dilutionYour slice can quietly grow or shrink.2 min
10. 10Which way is better?For some numbers lower is better, for others higher. Mix them up and every verdict flips.3 min
11. 11Compared to what?A number only means something next to another number. Here are the three yardsticks.4 min
12. 12Putting it all togetherLemon Co, judged step by step: every number, which way is good, and against what.5 min