It's understood that investors typically evaluate companies based on earnings. But what if there are no earnings, such as with young upstart companies or firms in temporarily tough times?
That's when you should focus on other measures instead. (And, besides, you should always be looking at other measures anyway.) Check out, for example, revenues, revenue growth rates, profit margins, debt levels, competitive positioning, and brand strength, among many other things. You essentially want to evaluate whether the company is on the path to profitability, and how well it's executing its strategy.
Here are some handy-dandy Fool articles offering insight into many different ways of looking at companies:
- How to Evaluate Management
- Using ROE and ROA
- The Importance of Enterprise Value
- Four Great Investing Equations
- 10 Things to Look for in an Annual Report
- An Investor's Guide to Conference Calls
- Calculating Cash Flow Ratios
- Analyzing Industries
- The P/E Is Not a Magic Number (part 1 and part 2)
- Rule Maker Metrics (part 1 and part 2)
- The Uselessness of the Price-to-Sales Ratio
- Four Ways Investors Are Tricked
- What Is Your Company Hiding?
- Where Fools Do Their Research
If you'd rather have someone else jump-start your research by pointing you to some interesting investment opportunities (both stocks and mutual funds) and making a case for them, consider checking out our suite of investment idea newsletters.
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