Article by Carl Fletcher

The daily press, together with a whole host of websites carry prices and other basic information about stocks and shares. On their own and collectively they offer valuable pointers about how the company is performing, how it s viewed by the market and what its future prospects are. Whichever financial website or newspaper you choose, the format the information is shown in is fairly typical and is explained below.

The name: First of all, the company name is given or an abbreviated version if there is insufficient room. The stock will be quoted with its peers either by sector e.g. banking if it is a comprehensive list of shares or by indices e.g. FTSE 100 if only quotes for the top companies are provided. Being listed with the same type of companies means you can compare its performance to that of similar organisations and lets you select stocks by sector or size.

The price: The share price is the price at the close of the previous trading session and is quoted in pence. This is the mid-price and not the price at which the share could be bought or sold and there will always be a margin between the two. For illiquid stocks and/or smaller companies, the actual buy/sell prices could be a significant percentage away from the mid-price.

Price Movement: The movement in pence is given as the difference between the closing price in the previous column and the prior days closing price. Alternatively, if the share price is in a weekend newspaper, the movement is likely to represent the price change over the previous week.

Price highs & lows: The next bit of information is the closing prices of the shares highs and lows. This might be for the calendar year to date or for the previous 52 week period. If you factor this in to your share trading criteria then make sure you determine which period the data covers so you properly assess where the current price sits in the trading range. Remember this is quite a crude indicator because if price movements is one of your key factors then charting or technical analysis is likely to be more appropriate.

Market Capitalisation: The market capitalisation is the stock markets value of the company and is calculated by multiplying the number of shares in issue by the current market price. Depending on price volatility the value of the company can vary considerably from day to day. The capitalisation will be quoted in millions.

Dividend Yield: The dividend yield will be quoted gross and will be calculated by taking the gross dividend paid by the company and dividing it by the current share price. Both are in pence and the yield is expressed as a percentage.

Price / Earnings ratio: Known as the p/e ratio and is perhaps the most important share price ratio for comparing shares (ideally in the same sectors) and will be discussed in detail in a later article. It is calculated by taking the share price and dividing it by the company’s earnings per share. The calculation of earnings can vary but is usually profits after taxation.

About the Author

Carl Fletcher writes for Indexed Results, the Link Building solutions network.