Monday, October 31, 2016

Investment Terminology - Identifying Stocks



Market capitalization or market cap is the total dollar market value of the shares outstanding of a publicly traded company; it is equal to the share price times the number of shares outstanding

Earnings per share (EPS) is the portion of a company's profit that is allocated to each outstanding share of common stock, serving as an indicator of the company's profitability

P/E Ratio - Market Value per Share / Earnings per Share (EPS) For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95).

P/C Ratio - The put-call ratio is a popular tool specifically designed to help individual investors gauge the overall sentiment (mood) of the market. The ratio is calculated by dividing the number of traded put options by the number of traded call options. As this ratio increases, it can be interpreted to mean that investors are putting their money into put options rather than call options. An increase in traded put options signals that investors are either starting to speculate that the market will move lower, or starting to hedge their portfolios in case of a sell-off.

The book value of a stock is the value of its total assets less total liabilities

The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's current market price to its book value. It is also sometimes known as a Market-to-Book ratio.

Face Value it is the original cost of the stock shown on the certificate.