Fundamental analysis judges a company's value from its financial numbers. Four metrics are enough for an individual investor to start with confidence on the EGX. This guide explains each simply, with how to interpret it.

1. Earnings per share (EPS)

EPS = net profit ÷ number of shares. It tells you how much the company earned per share. What matters most isn't the snapshot number but its trend: EPS growing year over year = an improving company.

2. Price-to-earnings ratio (P/E)

P/E = share price ÷ EPS. It tells you how much you pay for each pound of earnings. A P/E of 10 means you pay 10 EGP for each 1 EGP of annual profit.

  • Very high vs the sector: the stock may be expensive, or the market expects big growth.
  • Very low: could be an opportunity — or a sign of a problem. Always compare within the same sector.

3. Return on equity (ROE)

ROE = net profit ÷ shareholders' equity. It measures how efficiently management generates profit from shareholders' money. A high, stable ROE (say above 15%) is a quality sign — especially if it isn't driven by heavy debt.

4. Dividend yield

Dividend yield = annual cash dividend ÷ share price. Important for income seekers. But beware a very high yield caused by a falling price; check the dividend's sustainability. Read the dividends guide.

How to use them together

  1. Start with EPS: are earnings growing?
  2. Assess the P/E vs the sector: is the price reasonable?
  3. Check ROE: is management efficient?
  4. If you want income, look at the dividend yield and its consistency.

Every stock on the stock pages shows these metrics. For a deep valuation, the fair-value calculator computes a stock's intrinsic value automatically.

This content is educational and not investment advice.