Which indicators are used to assess the value and growth potential of a stock ?

Indian stock market is a well diversified market and it comprises of stocks belonging to different sectors. Traders face a lot difficulties to decide in which stock they should trade. It is very important to select good performing stocks as performance of stocks will only decide what returns you earn from market. Often traders prefer to follow trading tips, mcx tips as suggested by experts of market to be on the safer side and earn profitable returns from market. Studying different fundamental and technical factors related to stocks helps in understanding whether a trader should trade in it or not. Following are some indicators used to asses value and growth potential of stocks : 1) Earning per share (EPS) EPS is the measurement of profit made by a company over a year divided by total number shares issued by it in market. While calculating EPS, preferred shares are not included only common shares are included.rnEPS indicates the amount shareholders will get for each share they hold if company distributes its profit. This ratio helps in understanding which companies are performing well. Companies which shows steady growth and earnings are likely to perform well than companies which have inconsistent earnings. 2) Price to earning (P/E) ratio Among all indicators this is considered to be the best. Though P/E ratio has some imperfections , it is the most widely used indicator for valuation of stocks. It is calculated by dividing current market price of share by company's EPS. All information required to calculate this ratio is easily available on Internet or reports issued by companies. 3) Debt to equity (D/E) ratio This ratio is a leverage ratio. It is calculated by dividing total liabilities by equity. This indicator helps in understanding how much suppliers, creditors have invested in company and how much shareholders have invested. It is easy to calculate this ratio and determine equity- liability relationship of a company. 4) Dividend yield This is basically the measurement of return on dividend as a percentage of stock price. This ratio is calculated by dividing annual cash dividend per share by current market price of stock. You can determine how much cash-flow you are getting with the help of this indicator. These are few indicators which can be used for assessing stocks performance. Along with these there are many other indicators as well which are sometimes not easy to determine as well. Stock market traders can consult financial advisory services provider to pick good performing stock if they lack in sufficient market knowledge. Traders can use these important indicators and learn in which stocks they should trade. Market offers ample opportunities to earn profitable returns. In order to become successful trader, a trader needs to learn how to use these opportunities in most efficient manner. Earning good returns from market is not much difficult, stay disciplined and well informed to sustain here and earn well.