Earnings are important, but they don't say much by themselves. Earnings alone do not show how the market values ​​a stock.

Keep in mind that some of the most popular fundamental analysis tools focus on earnings, growth, and market value. These are some of the factors you'll want to include:

Earnings per share (EPS): Neither earnings nor the number of shares on their own tells you much about a company. But when you combine them, you get one of the most commonly used ratios for analysis. EPS tells us how much of the company's earnings are allocated to each share of stock. EPS is calculated as net income (after preferred stock dividends) divided by the number of shares outstanding.

Price-earnings ratio (P/E): Compares the current selling price of a company's stock to its earnings per share.

Estimated Earnings Growth (PEG): assumes a one-year earnings growth rate for a stock.

Price-Sales Ratio (P/S): The P/S ratio values ​​a company's stock price relative to its earnings. It is also sometimes called "PSR", "revenue multiple" or "sales multiple".

Price-to-book ratio (P/B): Also known as the "price-to-equity ratio," P/B compares a stock's book value to its market value. It is found by dividing the stock's last closing price by the book value per share for the last quarter. Book value is the value of an asset as it appears in the books of accounts. It is equal to the cost of each asset less accumulated depreciation.

Dividend Payout Ratio: Compares dividends paid to shareholders to the company's total net income, and also includes retained earnings, or income that is not paid out but held for potential growth.

Dividend yield: This is the total annual dividend compared to the share price. It is given as a percentage. Divide the payments per share in one year by the value of the share.

Return on equity: Divide the company's net income by equity to find the return on equity. You may also hear it called "return on equity."

Debt/Equity ratio: The debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company's financial statements.

RoE ratio: The return on equity is a measure of the profitability of a business in relation to the equity. Because shareholder's equity can be calculated by taking all assets and subtracting all liabilities, ROE can also be thought of as a return on assets minus liabilities.

ROE = Net Income / Shareholder’s Equity

There is no simple answer:

They are just tools, so remember that. It is impossible to get all the information you need from a single ratio or number. They cannot advise you on buying or selling on their own.