Course Content
Introduction
The stock market is a marketplace where shares of publicly listed companies are bought and sold. It plays a central role in the modern economy, acting as a bridge between businesses that need capital and investors who have money to invest. The origins of the stock market trace back to the early 1600s, when the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. This allowed the company to raise money from the public to fund its trade ventures, in return for a share of the profits. Over time, this concept evolved, and today, stock markets exist all over the world, with major exchanges like the New York Stock Exchange (NYSE), NASDAQ, and London Stock Exchange facilitating trillions of dollars in trade. At its core, the stock market enables businesses to grow. By offering shares to the public through a process called an Initial Public Offering (IPO), companies can raise large amounts of money to expand operations, invest in research, or develop new products—without having to rely solely on banks or private lenders. In return, investors get the opportunity to share in the company’s success through rising share prices and dividends. Investing in the stock market can be a powerful way to build wealth over time. Wise investments in strong companies can generate solid returns, especially when held for the long term. Many individuals have grown their savings substantially by investing in companies that have thrived. However, it’s important to remember that the stock market carries risks. Prices can go up, but they can also go down—sometimes sharply. Economic downturns, company mismanagement, or shifts in the global market can all lead to losses. For beginners, it's essential to approach investing with caution, avoid chasing “get rich quick” schemes, and take the time to understand what you're investing in. In short, the stock market is a powerful tool for economic growth and personal financial development—but like all tools, it must be used wisely.
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Introduction
Stock Markets Around The World
Listing On A Stock Market
How Stocks are Bought and Sold
Trade Date vs Settlement Date, What is T + 2?
What Is A Stock Market Index?
ETF’s and Index Funds
Fundamental Analysis
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Fundamental Analysis Introduction
Understanding Revenue and Profit
Earnings Per Share and PE Ratio
Understanding the Balance Sheet
Understanding Cashflow
Dividends – How Investors Earn Income From Their Shares
What Causes Stock Prices To Rise And Fall
Understanding Market Capitalization
Technical Analysis
Along with Fundamental Analysis, Investors increasingly rely on Technical Analysis to decide whether to buy or sell a stock. Here we will explore the main techniques.
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Introduction to Technical Analysis
How To Read A Price Chart – The Basics
Understanding Support and Resistance Levels
Identifying Trends and Drawing Trendlines
Understanding Moving Averages
Introduction to Momentum Indicators
Chart Patterns – Spotting Setups in the Market
Volume – The Power Behind a Price Movement
Investing Safely and Profitably
How do professionals invest safely and profitably? Some key concepts such as position sizing and stop losses.
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How To Place Trades And Manage Risk
Using A Trailing Stop To Protect Profits and Limit Loss
Diversification and Portfolio Management
Taking Profits
Common Investor Mistakes And How To Avoid Them
A Quick Word On Taxes
Summary and Beginner’s Checklist
10 Must Read Books for Investors and Traders
Beginners guide to investing in the Stock Market

Earnings Per Share and PE Ratio

 

Once we know how much profit a company makes, the next step is to ask:
How much of that profit belongs to me — the shareholder?

 

That’s where Earnings Per Share (EPS) and the Price-to-Earnings (P/E) Ratio come in.

 

 

Earnings Per Share (EPS)

 

EPS tells you how much net profit the company earned for each share of stock.

 

Formula:
EPS = Net Profit ÷ Number of Shares

 

Example:
If a company made $10 million in profit and has 5 million shares,
EPS = $2.00.

 

Why It Matters:

  • EPS gives investors a clearer picture of profitability per share.

  • It’s a key figure used to compare one company to another.

  • Rising EPS over time is usually a good sign.

 

 

Price-to-Earnings (P/E) Ratio

 

The P/E Ratio tells you how much investors are willing to pay today for $1 of earnings.

 

Formula:
P/E Ratio = Share Price ÷ EPS

 

Example:
If a stock trades at $40 and its EPS is $2.00,
P/E = 20 (Investors are paying 20 times the earnings).

 

 

What Does the P/E Ratio Tell You?

 

  • A high P/E could mean:

    • The company is growing quickly.

    • Investors are optimistic about its future.

    • Or — it may be overvalued.

 

  • A low P/E might mean:

    • The stock is undervalued.

    • Or — the company is struggling or shrinking.

 

Always compare a P/E ratio to:

  • Other companies in the same industry

  • The company’s own historical average

  • The overall market average (e.g. S&P 500 usually ranges 15–25)

 

 

Things to Watch Out For

 

  • A company can manipulate EPS with accounting tricks or by buying back shares.

  • A low P/E isn’t always a bargain — it could signal underlying problems.

  • Use the P/E with other indicators, not in isolation.

 

 

Summary

 

  • EPS shows how much profit is earned per share.

  • P/E Ratio shows how much investors are paying for those earnings.
    These tools help investors decide if a stock is cheap, expensive, or fairly priced based on its profitability.

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Stock Market Course