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Identifying Symbols and Interpreting Stock Quotes
SMG Lesson #3
http://www.thesimpledollar.com
2006 Foundation for Investor Education. All Rights Reserved.
F.H. O’Hara
Begin
Identifying
Symbols and
Interpreting
Stock Quotes
SMG Lesson 3
Ticker Symbols
• To enter transactions in The Stock
Market Game (SMG), teams must
enter the ticker symbol of the company
or fund they wish to buy or sell.
• Ticker symbols are what stock
exchanges use to identify listed
companies.
Ticker Symbols
• Companies listed on the New York
Stock Exchange (NYSE) have one to
three letters in their ticker symbols.
• The NASDAQ Stock Market and
American Stock Exchange identify
companies and funds with symbols that
maybe as long as five letters.
Newspaper Symbols
• The online SMG team portfolios
provide teams with ticker symbol
lookup tools.
• Your local paper may also list stock
prices. However, newspapers stock
listing do not use ticker symbols to
identify companies in its stock listings.
Newspaper Symbols
• Newspapers have their own naming
convention.
• All stock markets use the same symbol
for a company
• Each newspaper may have its own
name for the same company.
Newspaper Symbols
• For example, Citigroup’s ticker symbol
is “C.”
• One newspaper uses “ctygrp” for the
company, another uses “citi” and a
third uses its real ticker symbol, “C.”
How to find Ticker
Symbols
• What is the symbol for General
Motors?
• GM
• What is the symbol for General
Electric?
• GE
What is the symbol for
Coca Cola?
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CCLAY
CCLAF
KO
KOF
CCHOF
CCH
CCHBF
COKE
CCE
• http://finance.yahoo.com
Dividend
• Part of a company’s profits (earnings)
paid periodically to stockholders.
Volume
• The number of shares traded in a
company's stock.
• Unusual market activity, either higher
or lower than average, is typically the
result of some external event.
P/E Ratio:
• Stands for price-to-earnings ratio.
• The P/E is the relationship between a
company's earnings and its share
price.
• It is calculated by dividing the current
price per share by the past 4 quarters
(the previous four 3 month periods)
earnings per share.
What’s the use of
P/E?
• P/E is the simplest number available to
compare the quality of stocks in the
same sector.
• It puts big companies and small
companies on a relatively level playing
field and trims them (roughly) to the
quality of their business.
What’s the use of
P/E?
• In general, a lower P/E ratio indicates
either a:
• Bargain
• Troubled company
• Very steady consistent company
• Higher P/E either means the company
is a “best of breed” or it is overvalued.
P/E Example
• At the end of the last fiscal year, Whirlpool
(WHR) reported that their company earned
$5.67 per share.
• This means that for every share of stock of
Whirlpool, the company earned $5.67.
• Today, Whirlpool’s stock price is 88.91.
• Dividing the price (P) by the earnings per
share (E) gives you the P/E ratio: 15.69.
P/E Comparison
• One competitor of Whirlpool in the same
sector is Black & Decker Corporation (BDK),
which has a P/E of 13.07 and a F P/E of
13.02.
• Whirlpool’s current P/E is 15.69, which
means that currently Whirlpool has a higher
P/E than Black & Decker
• This basically indicates that the sector is
even.
Why Use P/E
• People who seek established
companies with low P/E ratios are
called value investors.
• They’re looking for stocks that have a
good value and show every indication
of being steady earners in the short to
intermediate term.
Forward P/E
• Instead of using the company’s last
reported earnings per share for the
calculation, forward P/E uses the
estimates of Wall Street analysts of
what the company’s next earnings per
share report will be.
• Usually, this estimate is an average of
a bunch of analyst’s guesses.
Forward P/E Example
• The Whirlpool example again:
• Analysts are expecting the company to
report earnings of $9.10 per share in their
next report.
• Today, Whirlpool’s stock price is 88.91.
• Dividing the price (P) by the earnings per
share (E) gives you the P/E ratio:
• This gives Whirlpool a forward P/E (often
listed F P/E) of 9.80.
Forward P/E
Comparison
• Whirlpool has a much lower forward
P/E (9.80 vs. 13.02).
• This indicates that Whirlpool may be
about to become a bargain
• You may want to see what Whirlpool
has been up to lately by reading news
reports about them.
Beta
• The beta is a statistical model that estimates
how closely the stock’s performance
matches the stock market in general.
• The higher the beta, the closer the stock
matches the general market.
• Blue chip stocks generally have a higher
beta, whereas speculative stocks generally
have a lower beta.
• The lower the beta, the more risky the
investment.
Understanding Beta
• Beta is correlation with the stock
market.
• A stock with a beta of 1 will rise (or fall)
in value at the same rate as the stock
market.
• A stock with a beta of 1.3 will rise and
Understanding Beta
• A beta of zero means the stock doesn’t
follow the market at all, and does its own
thing
• A good example is a CD, (Certificate of
Deposit, a bank account with a guaranteed
interest rate) where you get a fixed rate of
return no matter what happens in the stock
market.
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Identifying Symbols and Interpreting Stock Quotes
SMG Lesson #3
http://www.thesimpledollar.com
2006 Foundation for Investor Education. All Rights Reserved.
F.H. O’Hara
Fin