Polar Bear Capital Management
Glossary
Market Cap
- how much a company is viewed to be worth
- the price it would cost to buy the entire company
this includes all assets (capital, equipment, inventory) as well as non0tangible items such as brand recognition - Market Cap = (Oustanding Shares)x(Share Price)
- Examples: Jack in the Box has a $1.37B market cap. Wendy's has a $6.62B market cap
Earnings
- the net income of a company (after-tax)
- key driver of stock price because a stock is priced according to what people believe the company will earn in the future (all future profits)
Earnings per Share (EPS)
- A quarterly report of a company's earning, main indicator of a company's performance
- EPS = (earnings)/(oustanding shares)
- Examples: Jack in the Box: $2.48 Wendy's $1.92
Price to Earnings Ratio
- P/E = (Market value per share)/(EPS)
- Referred to as "the multiple", which represents how many dollars an investor is willing to pay per dollar of earnings
- can be used as a rough measure of how "cheap" a company is
- It's the most useful to compare P/E within industries
- Examples: Jack in the Box:15.59 Wendy's 29.65