How to Read Stock Quotes
If you want to invest in stocks, one of the first lessons that you need to learn is how to read stock quotes or stock prices. These are the numbers you usually see on the screens of television networks that report on the performance of the stock market. Stock quotes are also available online and on business newspapers.
To get a stock quote, all you need is just the trading symbol of the stock, which is also known as its ticker symbol (e.g. GOOG for Google, KO for the Coca-Cola Company, and WMT for Wal-Mart). If you’re getting a stock quote from an online site, you can also look up the ticker symbol by simply typing in the name of the company. A stock quote has various components. Here’s a screenshot of the stock quote of Google Inc., the giant global technology company. An explanation of the components follows:
As you can see, the ticker symbol for Google Inc. is GOOG and it trades on the NASDAQ, the stock market that trades mostly on technology stocks. The big bold number refers to the Last Trade. This is the recent trading price for the stock. In this case, Google stocks traded at US$641.33 at the close of the August 3 trading day. The other data are as follows:
1. Range. This refers to the price range that the stock traded at during the trading day. The lowest price Google traded at was $636.14 and the highest was $643.72
2. 52-Week Range. This is the price range which indicates the high and low prices which the stock traded at during the last 52 weeks. In this time period, the lowest price which Google traded at was $480.60 and the highest was 670.25.
3. Open. This is the trade price of the stock when the market opens. For this stock, the opening price on the next trading day is $640.
4. Volume. This tells the average volume of stocks that traded on the latest trading day. The average volume, meanwhile, refers to the volume traded for the past 30 days.
5. Market Capitalization or Mkt cap. This refers to the current value of all Google stocks. To arrive at this value, you multiply the current price per share with the total number of outstanding shares. Google’s market capitalization based on this stock quote is pegged at $209.74 billion.
6. Price-to-Earnings Ratio or P/E. Calculated by dividing the share price by the annual earnings per share, this is one of the statistics that tell potential investors a lot about the performance of a stock. Google has a P/E of 19 which generally indicates that this stock has the potential to increase earnings substantially in the future.
7. Dividend/Yield. This refers to the dividend that the company pays to its stockholders. For many companies, the dividend is paid out every three months. Google does not pay dividends to its stockholders.
8. Earnings per Share or EPS. This refers to the net income of the company divided by the shares outstanding.
9. Shares Outstanding. As its name suggests, the shares outstanding refer to the number of shares that the investors and company insiders hold.
10. Beta. This is a measure of the risk or volatility of the particular stock relative to the market or a particular benchmark.
11. Institutional Ownership. This refers to the percentage of the shares outstanding that is held by institutional investors like pension plans. The institutional ownership of Google’s stock is pegged at 67 percent.
Now that you know how to read stock quotes, you can start buying stocks. But not too fast! You have to decide whether you want to get it directly from the companies or do it through a brokerage firm. Here are the pros and cons of each.
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