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Journal : Asian Journal of Management Analytics

Decoding Stock Price Movements: How Net Profit Margin and Debt-to-Equity Ratio Drive Value, with Earnings per Share as the Game-Changer Muslim, Ahmad Bukhori; Wulandari, Dian Sulistyorini; Rusyidi, Rahimi Annisa Sanjo
Asian Journal of Management Analytics Vol. 3 No. 4 (2024): October 2024
Publisher : PT FORMOSA CENDEKIA GLOBAL

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55927/ajma.v3i4.12049

Abstract

This research investigates the relationships between Net Profit Margin (NPM), Debt-to-Equity Ratio (DER), Earnings per Share (EPS), and stock prices within the context of the Indonesian stock market. Utilizing a quantitative analysis approach, the study employs panel data regression to assess the statistical significance of these financial metrics on stock valuations. The findings reveal that NPM has a meaningful and statistically significant positive impact on stock prices, indicating that higher profit margins are associated with increased investor confidence and market valuation. Conversely, the results show that DER does not significantly influence stock prices, suggesting that investors may perceive high debt levels as a risk that diminishes stock value. Furthermore, the study finds that EPS does not moderate the relationship between NPM and stock prices, nor does it strengthen the effect of DER on stock valuations. These conclusions contribute to understanding financial determinants in stock price movements, emphasizing the importance of profit margins while highlighting the limited role of leverage and earnings per share in this context. The research provides recommendations for investors and corporate managers and suggests avenues for future studies, including broader geographic comparisons and integrating qualitative factors into stock valuation analysis.