Stock market investing
Google finance is a great tool to use in your investing arsenal. It’s a great way to get updated ticker information, and I use Google finance particularly to see past ticker information. You can set the exact date range of when to see past price closing prices, as well as 1d, 5d, 1m, 3m, 6m, YTD, 1yr, 5yr, 10yr, and All.
When you first enter Google Finance, there’s a myriad of options to look through. There’s a Market Summary section, a Top stories section, Trends, Sector summary and more. At the very top is a search bar, which is where you’ll want to enter a ticker to see its data.
Here’s what the top left section looks like.
Real-time: 10:24AM EDT
NYSE real-time data – Disclaimer
Currency in USD
The first number is the stock price. Below that is how much the stock has moved for the day, with the percentage move right next to it. If the market is currently closed, then this set of numbers is telling you how much the stock has moved in the after hours.
The next row tells you at what time this price was looked up. Keep in mind that stock prices can move by the second, and so this feature tells you at what time the stock was at that price. If the market is closed, you’ll see the date and the word “close” replacing the time.
The row below that tells you which stock market index the stock you looked up trades on. Most times you’ll see NYSE or NASDAQ if you’re looking at the bigger U.S. stocks.
The range tells you the high and low that the stock has moved for the day. In the case you are looking up the stock after hours, this will show up as nothing.
|52 week:||27.81 – 45.72|
This is the high and low that the stock has moved for the past 52 weeks. These numbers can give you a good sense of the general volatility of the stock for the past year.
The open is the price of the stock at the market’s open. If you are looking up the stock when the market is closed, this will show up as nothing.
Vol refers to volume, which is the number of shares that were bought or sold during the day. When a stock has moved a high percentage either up or down, this is usually accompanied with a high value.
Avg. refers to the average volume this particular stock has seen in the past 30 days. You can compare these two numbers to determine if the volume is particularly high or low for the day.
Mkt cap is the market capitalization of the stock at the time of look up. Remember that market capitalization is the number of shares times the share price. This gives you a picture of the real size of a company in the market, not the share price itself.
A company with a lower stock price might actually be bigger than one with a higher stock price if it has more shares outstanding and thus a higher market capitalization.
P/E is the price to earnings of the stock. This takes the market capitalization, or the price, and divides it by the company’s total earnings. A lower P/E is generally favored because it indicates that the stock is cheaper relative to its earning power. P/E is one of the major valuation metrics normally used in a value oriented stock analysis.
Note that you can also calculate this ratio by dividing the share price by the earnings per share. This way just takes out the shares outstanding from both sides of the equation.
Div is the dividend payment paid out annually to shareholders. Yield calculates the dividend payment against the share price and tells you what percentage return this dividend will be on your capital.
EPS is the earnings per share of the company. Obviously as an investor you want as high of a number as possible, but how good a company’s EPS is depends on its relation to the stock price (which is what P/E shows you). A company could have a higher EPS but still be less profitable to an investor as a company with a lower EPS and lower stock price.
Shares tells you the number of shares outstanding, or the number of shares held by investors and company insiders. This value is diluted, which means that unvested RSUs and stock options are included in this calculation.
Beta compares the stock’s volatility to the general market’s volatility and spits out a number based on this. If beta is 1, the stock has the same volatility as the market. A value less than 1 indicates less volatility, and a number greater than 1 indicates more.
Some analysts and financial planners like to use beta as an indicator of risk. I’ve argued that this is actually foolish, and have explained why in this blog post.
Inst. own is the institutional ownership percentage, or the percentage of shares outstanding held by institutions such as pension plans, mutual funds, insurance companies, and others that hold stock.
Some investors like to see a high percentage because it could indicate more shareholders who are in for the long term. It could also indicate the probability for a fast steep decline… if many of these institutional owners are mutual funds that trade on momentum, for example.
If you scroll further down the page, you’ll see a section with more helpful values.
Key stats and ratios
|Q1 (Jan ’16)||2015|
|Net profit margin||10.26%||7.42%|
|Return on average assets||15.49%||11.85%|
|Return on average equity||23.11%||18.05%|
|CDP Score||–||92 D|
Net profit margin: the percentage of revenue that turns into net profit.
Operating margin: the percentage of operating income (revenue minus operating expenses) divided by revenue
EBITD margin: EBITD stands for earnings before taxes, interest and depreciation.
ROA, ROE: ratio of a company’s earnings divided by its average assets, average shareholders equity (total assets – total liabilities)
With each of these percentage based ratios, you generally want to see a higher number. Higher profit margins mean higher profits, and often indicate an efficient company.
Employees: self explanatory
CDP score: CDP is a company that works to prevent climate change. This score is the grade that CDP gives a company based on its effect to the environment. While an interesting metric, this doesn’t give us any information on the profitability or value of a company.
So I hope this helps you decode Google Finance a little better. It’s always good to have tools such as this to aid you in your research.
But remember, the knowledge you teach yourself is what makes these tools useful. Learn as much as you can to make you a better stock picker.
At the very least, obtain a basic understanding of how the stock market works and the principles behind a successful strategy such as value investing.
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