A stock quote primarily shows the price of a stock on its exchange market and updated real-time (usually) during a trading session. Other secondary stats making up the stock quote help investors make an informed investment decision.
I don’t disagree the possibility of information overload when researching stocks. Even I get overwhelmed sometimes on what each detail means in my decision making. Yet, it is essential to know how to read a stock quote. It gives plenty of insight into the underlying company for a better purchase decisions.
Company Name, Stock Exchange, Stock Ticker / Symbol
This shows the full name of the publicly-traded entity, the exchange market it is listed in, and it’s shorthand identifier in the stock market.
Current Price, Price Change
This shows the most updated price. During market trading session, price displayed could either be real-time or delayed. After market trading session, price displayed is the closing price from the most recent trading day.
Price change is captured both as a percentage difference and absolute difference. It shows how much price has moved today or from the most recent trading day. Percent change is probably the more useful gauge, as a dollar fall for a $10 stock is different for a $100 stock. It makes a difference in understanding whether it is a strong or weak decline.
These show the range for the day’s market trading session, for the price the stock opened at, the maximum price and minimum price reached. The information is most useful to day traders as they monitor small, intraday price movements. It is less useful to the average longer-term investors whose holding period is for weeks, months, or even years.
This shows the overall value of the shares of a publicly traded company or simply, the number of shares multiplied by share price. The market cap gives an indication of the size of the company.
|Overall Value||Market Capitalisation|
|$0 — $50 million||Nano-cap|
|$50 million — $300 million||Micro-cap|
|$300 million — $2 billion||Small-cap|
|$2 billion — $10 billion||Mid-cap|
|$10 billion — $300 billion||Large-cap|
|$300 billion and above||Mega-cap|
In reality, we usually only hear the terms “small-cap stocks”, “mid-cap stocks” and “large-cap stocks” to refer to small-size, medium-size and large-size companies.
This shows one of the most popular valuation metrics used to determine if a stock is undervalued or overvalued. The ratio is the price of one share divided by earnings per share in the last 12 months. A word of caution, it has limited ability in the prediction of true undervaluation or overvaluation of a stock.
A lower ratio (price relatively closer to the last 12 months earnings per share) might suggest a cheaper stock, and vice-versa for a higher ratio, since an investor would have to potentially pay many more multiples of the last 12 months earnings per share to buy the stock.
This shows, relative to the current stock price, how much return the dividend will provide. The yield is the percentage of next 12 months of dividend income against current share price.
A word of caution: Higher yield usually means more dividend income, but it can also be attributed to the fact that there is lower stock price gains or unsustainable high dividend payout.
This shows the final closing price from the most recent market trading session. It gives an indication of how investors valued the company during the last trading session.
52-Week High and 52-Week Low
This shows the highest and lowest traded price in the trailing 52 weeks. Against the Current Price, it indicates how close the stock is to breaking new highs or setting new lows for the year. I personally use this indicator to invest on Breakouts and Reversals.
This sums up the basics of a stock quote. Has this helped you make a better informed decision?
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