The rest of the statistics panel, decoded

Below the headline numbers sits a panel of ratios that look intimidating but each answer one simple question. This lesson defines and computes the lot: beta and volatility, plus P/B, P/S, PEG, EV/EBITDA, ROE, profit margin, short interest and days-to-cover. We will run one fictional company, ACME, through every one.

Beta and volatility

Definition.

Beta measures a stock's sensitivity to the overall market. Beta = 1 moves with the market; >1 amplifies it; <1 dampens it; negative moves opposite. Volatility is the size of a stock's own price swings (often annualized standard deviation of returns).

ACME · beta read

Beta 1.25 Market moves +1.0% → expect ACME ≈ +1.25% Market moves −1.0% → expect ACME ≈ −1.25% Read 25% MORE swing than the index, both ways

A 1.25 beta means ACME tends to move 25% more than the market in either direction — more reward in rallies, more pain in selloffs. Beta is about relative volatility versus the index; it says nothing about company-specific risk, which volatility and the fundamentals below capture.

P/B and P/S — price against book and sales

ACME · P/B and P/S

Price 142.50 Book value/share 33.93 P/B = 142.50 ÷ 33.93 = 4.2× Market cap 71.25B Revenue 13.97B P/S = 71.25 ÷ 13.97 = 5.1×

P/B 4.2 means the market values ACME at 4.2× the accounting net worth of its assets — common for asset-light firms with valuable intangibles. P/S 5.1 means you pay $5.10 per $1 of annual sales; P/S is the go-to multiple when earnings are thin or negative, since revenue is always positive.

PEG — valuation adjusted for growth

ACME · PEG

Trailing P/E 19.8 Expected EPS growth 18%/yr PEG = 19.8 ÷ 18 = 1.1

The PEG of 1.1 divides the P/E by the growth rate. A PEG near 1 is the classic "fairly priced for its growth" benchmark; well below 1 hints at a bargain relative to growth; well above 2 suggests you are paying up. PEG rescues high P/E growth stocks that look expensive on P/E alone.

EV/EBITDA — the capital-structure-neutral multiple

ACME · EV/EBITDA

Enterprise value (Lesson 3) 78.25B EBITDA 5.59B EV/EBITDA = 78.25 ÷ 5.59 = 14×

Using the enterprise value from Lesson 3 over EBITDA (earnings before interest, taxes, depreciation, amortization), EV/EBITDA of 14 compares the whole business to its core cash earnings, ignoring how it is financed. It is the multiple acquirers and analysts lean on most because it neutralizes debt and tax differences.

ROE and profit margin — quality of the business

ACME · returns and margin

Net income 3.6B Equity 16.36B ROE = 3.6 ÷ 16.36 = 22% Net income 3.6B Revenue 13.97B Net margin = 3.6 ÷ 13.97 = 24%

ROE 22% says ACME earns 22 cents of profit per dollar of shareholder equity — a strong return on the capital owners have invested. Net margin 24% says 24 cents of every sales dollar reaches the bottom line — a highly profitable operation. High, stable ROE and margins are hallmarks of a quality, competitively-moated business.

Short interest and days-to-cover

Definition.

Short interest % = shares sold short ÷ float. Days-to-cover (short ratio) = shares short ÷ average daily volume — how many normal trading days shorts would need to buy back their position.

ACME · short metrics

Float (Lesson 4 style) 420M Shares short 25.2M Short interest = 25.2 ÷ 420 = 6% Avg daily volume 7.2M Days-to-cover = 25.2 ÷ 7.2 = 3.5 days

6% short interest at 3.5 days-to-cover is moderate. High short interest with high days-to-cover is fuel for a short squeeze: if price rises, shorts scramble to buy back, but it would take 3.5 days of normal volume to unwind — that buying pressure can accelerate a rally.

Reading the chart

When a heavily-shorted stock breaks higher, the forced buying from shorts covering adds demand on top of normal buyers, which is why squeezes can look so violent. The RSI pane racing into overbought reflects that crowded, one-directional rush. Days-to-cover tells you how much pent-up covering remains as ammunition.

Pitfall.

No single ratio decides anything. A low PEG with deteriorating margins, or a high ROE driven purely by heavy debt (leverage flatters ROE), can mislead. Read the panel as a SYSTEM — cross-check valuation (P/E, P/S, EV/EBITDA, PEG) against quality (ROE, margins) and positioning (short interest, beta).

▸Try It

Goal: compute and interpret the full ratio panel for one company.

Pick a company and gather: price, book value/share, market cap, revenue, EBITDA, net income, equity, P/E, growth rate, float, shares short, and average volume.
Compute P/B, P/S, PEG, EV/EBITDA, ROE, and net margin from the formulas above. Match each to the quote.
Compute short interest as a percent of float and days-to-cover.
Write one sentence summarizing whether the stock looks cheap or rich, high or low quality, and crowded or not — using the panel as a whole.