Top 10 Metrics Smart Investors Always Check First

With thousands of stocks to choose from and dozens of financial metrics available, where should you actually start? We asked ourselves the same question and distilled it down to the 10 metrics that matter most — the numbers that experienced investors look at before anything else. Whether you are building a portfolio from scratch or evaluating a new idea, these are your essential checkpoints.

1. Price-to-Earnings Ratio (P/E)

The P/E ratio is the most widely used valuation metric in investing. It tells you how much investors are paying per dollar of current earnings.

• What to look for: Compare a stock's P/E to its sector average and its own historical range. A P/E below the sector average could signal undervaluation — or a business in decline.
• Screen for it: Find stocks with low P/E ratios

2. PEG Ratio

The PEG ratio improves on P/E by factoring in earnings growth. It divides the P/E ratio by the expected EPS growth rate, telling you whether the valuation is justified by the company's growth trajectory.

• What to look for: A PEG below 1.0 suggests a stock may be undervalued relative to its growth. Above 2.0 means you may be overpaying for the growth.
• Screen for it: Find stocks with low PEG ratios

3. Return on Equity (ROE)

ROE measures how efficiently a company uses shareholder capital to generate profits. It is one of the best indicators of management effectiveness.

• What to look for: ROE above 15% is generally strong. But verify that high ROE is not solely from excessive leverage — check debt levels alongside.
• Screen for it: Find stocks with high ROE

4. Return on Invested Capital (ROIC)

ROIC goes deeper than ROE by measuring returns on all capital (debt + equity), using operating profit instead of net income. It cannot be artificially inflated with leverage, making it the gold standard for business quality.

• What to look for: ROIC consistently above 15% indicates a company with a durable competitive advantage creating real value for shareholders.
• Screen for it: Find stocks with high ROIC

5. Free Cash Flow Yield

FCF yield tells you how much real cash a company generates relative to its stock price. Unlike earnings, cash flow is much harder to manipulate through accounting choices.

• What to look for: FCF yield above 5% is attractive for most sectors. A low Price/FCF ratio (under 20) signals the stock is reasonably priced relative to its cash generation.
• Screen for it: Find stocks with strong free cash flow

6. Debt-to-Equity Ratio

Debt-to-equity measures financial leverage — how much of the company is financed by debt versus shareholders' equity. It is a key indicator of financial risk.

• What to look for: Generally, D/E below 1.0 is conservative. Above 2.0 warrants scrutiny. But some industries (utilities, REITs) naturally carry more debt. Always compare within sector.
• Screen for it: Find stocks with low debt

7. Revenue Growth

Revenue growth shows whether a company is expanding its business. It is the top line — without revenue growth, everything else eventually stalls.

• What to look for: Consistent revenue growth above 10% annually is a strong signal for growth stocks. For value and dividend stocks, even mid-single-digit growth shows a healthy business.
• Screen for it: Find fast-growing companies

8. Gross Margin

Gross margin reveals how much profit a company retains after paying the direct costs of producing its goods or services. It is a window into pricing power and competitive positioning.

• What to look for: High gross margins (above 50%) suggest strong pricing power. Stable or expanding margins over time are more important than the absolute level. Declining margins are a red flag.
• Screen for it: Find companies with high margins

9. EPS Growth

Earnings per share growth measures how quickly a company is growing its profits on a per-share basis. This is ultimately what drives stock prices over the long term.

• What to look for: Consistent EPS growth of 10-15%+ is excellent. Watch for EPS growth that exceeds revenue growth — this signals improving efficiency, but could also mean unsustainable cost cutting.
• Screen for it: Find stocks with strong earnings growth

10. Dividend Yield

Dividend yield shows the annual dividend payment as a percentage of the stock price. For income-focused investors, it is a primary screening criterion.

• What to look for: A yield of 2-4% is solid for most blue-chip dividend payers. Be cautious with yields above 6% — they often signal that the market expects a dividend cut. Prioritize companies with a history of growing dividends over those with the highest yield.
• Screen for it: Find dividend-paying stocks

Putting It All Together

No single metric tells the full story. The best investors use these metrics in combination, checking multiple angles before making a decision. Here is a quick framework:

1. Start with valuation (P/E, PEG, FCF yield) — is the price reasonable?
2. Check quality (ROE, ROIC, gross margin) — is this a good business?
3. Assess growth (revenue growth, EPS growth) — is the business expanding?
4. Evaluate risk (debt-to-equity) — can the company weather a downturn?

Ready to screen with all of these metrics? Launch the Quality Screener to start with a pre-built filter set designed to find high-quality businesses at fair valuations.