Price-to-earnings (P/E) ratio : Companies report their profits to shareholders as earnings per share, or EPS for short.With that in mind, let's take a look at four of the most important and easily understood metrics every investor should have in their analytical toolkit to understand a company's financial statements: By focusing on great businesses trading at fair prices, we believe investors can beat the market over time. We at The Motley Fool generally are advocates of fundamental analysis. Technical analysis typically focuses on short-term price fluctuations. One important distinction is that fundamental analysis is intended to find long-term investment opportunities. If you've ever seen someone trying to identify patterns in stock charts or discussing moving averages, that's a form of technical analysis. In other words, by analyzing a stock's price history, you may be able to predict its future price behavior. Technical analysis generally assumes that a stock's price reflects all available information and that prices generally move according to trends. Fundamental analysis is designed for investors looking for excellent long-term returns. Fundamental analysts use valuation metrics and other information to determine whether a stock is attractively priced. This is the central tool value investors use to try to find the best investment opportunities. This analysis is based on the assumption that a stock price doesn't necessarily reflect the intrinsic value of the underlying business. When it comes to analyzing stocks, there are two basic ways you can go: fundamental analysis and technical analysis. Understand the two types of stock analysis
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