JNJ vs MCD

PER PER (price/earnings) Price-to-earnings: the share price divided by earnings per share — roughly how many years of today's earnings you're paying for. Lower can mean cheaper, but only compare within the same industry. Learn more →

Chowder number Chowder number A dividend-growth screen: the current yield plus the 5-year dividend growth rate. A common rule of thumb wants at least 8% for higher-yield stocks (yield above 3%) or 12% otherwise — a quick gauge of total dividend-return potential. Learn more →

Fair value vs price Fair value (DDM) An estimate of what a share is worth based on its dividend: next year's dividend divided by the required return minus the dividend growth rate (the Gordon Growth model). Compared with the price to flag under- or over-valuation; it only applies when growth stays below the required return. Learn more →

2-stage DDM vs price Two-stage DDM A dividend discount model with two phases: a few years of fast growth at the company's recent rate, then a slower, permanent "terminal" rate. Because the fast phase is finite, it can value fast growers where the simple Gordon Growth model breaks down (when growth is close to or above the required return). Learn more →

Margin of safety Margin of safety Benjamin Graham's idea of only buying when the price sits a comfortable distance below your fair-value estimate, leaving room for error. Here a stock reads "cheap" when the price is at least 15% below fair value, "expensive" when 15% above, and "fair" in between. Learn more →

Dividend Yield Theory Dividend Yield Theory A valuation idea (Geraldine Weiss): a quality dividend payer is relatively cheap when its yield is near the high end of its own historical range, and expensive near the low end. The implied fair price is the annual dividend divided by the stock's average historical yield. Learn more →

MA200 200-day average The average closing price over the last 200 trading days — a slow gauge of trend. A price below it is often read as a relative discount. Learn more →