Investors - Glossary
Analysts - Individuals working for a research or brokerage firm. They make forecasts about companies' future earnings, revenues, growth rates, and stock price (price target). They also make recommendations regarding buying, selling, or holding a particular stock.
"Buy" Recommendation - An analyst recommendation to purchase a stock, generally indicating that the stock should outperform other comparable stocks.
Common Stock - Shares held in a public company that give holders of those shares voting rights and the right to receive dividends when they are declared by the board of directors. In general, there are two types of shares, common and preferred stock. Common stock holders share in the success when a company profits; however, they are also at risk if the company falters. In the event of liquidation of the corporation, common stock has lower priority than preferred stock and bonds (debt).
Company - A corporation or a limited partnership with publicly traded stock.
Debt - Securities such as bonds, notes, mortgages and other forms of paper that indicate the intent to repay an amount owed. A cash payment of interest and/or principal is made at a later date in time. This is in contrast to an equity investment where there is an exchange of shares of common stock, or ownership of the company.
Depreciation - Charges against earnings to write off the cost, less salvage value, of an asset over its estimated useful life.
Downgrades - When an analyst reduces a recommendation for a stock. Examples include changing a "buy" recommendation to a "hold," a hold to a "sell".
Earnings - The net income or profit for a company. This amount consists of revenues minus all costs (including taxes).
Earnings Estimates (Forecasts) - An analyst's prediction about a particular company's earnings for a future quarter or year. It is an estimate whether a company will increase, decrease, or remain flat in its operating income and overall profitability.
Earnings Estimate Date - The date on which an analyst makes an annual or quarterly earnings estimate for a stock.
Earnings per Share (EPS) - The profit per share for a company. This amount is equal to earnings (net income) divided by the number of shares outstanding for that company.
EBITDA - Earnings before interest, taxes, depreciation, and amortization.
Enterprise Value (EV) - The total market capitalization of a company plus any outstanding debt. This is the cost of acquisition should one entity merge with or acquire another and assume the outstanding debt.
Equity - An investment in exchange for ownership of a company entitled to the earnings of a company after all other investors (e.g. debt-holders) have been paid. See also: stock
Exchange - A registered marketplace where securities are traded. Securities exchanges include the New York Stock Exchange, the American Stock Exchange, and regional exchanges such as the Philadelphia Stock Exchange and the Pacific Stock Exchange. Stocks trading on an exchange are referred to as listed securities.
Fiscal Quarter - A 12-, 13-, or 14-week (three-month) period designated as a quarter (of a year) by a particular company, used for financial reporting and tax purposes.
Fiscal Year - A 52- or 53-week (12-month) period designated as a year by a particular company, used for financial reporting and tax purposes.
Forecast - A prediction about the future, concerning a company's earnings, revenues, stock prices, or other financial data.
"Hold" Recommendation - The recommendation that investors maintain their current position in a stock. This generally indicates that the stock should perform similarly to other comparable stocks.
Interest - The price paid for the use of credit or money. It may be expressed either in money terms or as a rate of payment.
Market Capitalization (Market Cap) - The market value of all the stock in a company. This equals the price per share, multiplied by the number of shares outstanding.
P/E Ratio - Shows the relationship between a stock's price and a company's earnings. The P/E ratio is calculated by dividing the current price of the stock by the earnings per share (either the company's trailing annual earnings per share or the company's expected earnings per share). This is used to compare the relative value of different stocks. The P/E ratio is also called the multiple.
Portfolio - A group of securities or stocks held together for investment purposes.
Price Target - A stock price that an analyst forecasts will be reached by some future date.
Profit - See earnings.
Recommend Date - The date on which an analyst makes a "buy," "sell," or "hold" recommendation for a stock.
Recommendation - Analyst statement regarding the future prospects of a particular stock's prices.
Return - The increase in value of a stock or portfolio over a specified period of time.
Return on Buy-Rated Stocks - The performance or return of portfolios created from an analyst's "strong buy" and "buy" recommendations, measured over periods of one, two, and three years.
Revenues - The dollar amount of sales generated by a company.
"Sell" Recommendation - An analyst recommendation to sell a stock, generally indicating that the stock should underperform other comparable stocks.
Shares (Common Stock) - Portion of equity ownership in a company.
Shares Outstanding - The number of shares issued by a company, net of any shares repurchased by the company.
Stock - A financial instrument reflecting an equity ownership position in a company.
"Strong Buy" (Recommendation) - A strong analyst recommendation to purchase a stock, generally indicating that the stock should outperform other comparable stocks by a wide margin.
"Strong Sell" (Recommendation) - A strong analyst recommendation to sell a stock, generally indicating that the stock should underperform other comparable stocks by a wide margin.
Tax - A contribution for the support of a government required of persons, groups, or businesses within the domain of that government.
Upgrade - When an analyst improves a recommendation for a stock. Examples include changing a "hold" recommendation to a "buy" or a "sell" to a "hold" recommendation.
Volume - The number of shares traded for a particular stock or exchange.