In order to become comfortable with the stock market, young investors must familiarize themselves with various kinds of tables and reports. These include dividend tables, earnings report tables and company profiles. The figures and symbols that appear in these reports may appear intimidating at first. However, once you get the hang of it, you’ll be able to understand the performance of your stock and can make decisions based on the data you are given.
Let’s start getting familiar with dividend tables. These dividend report tables will tell you if a company gives dividends to its shareholders. More specifically, it will tell you if the board of the directors of that firm has given a higher, lower or the same dividend compared to the previous quarter. The table will also tell you if the board has not given dividends for this particular time period.
In case you’ve forgotten what a dividend is, let’s do a little recap. A dividend is the distribution of a part of the company’s earnings that is given to the company’s shareholders. Take note that the dividend is usually quoted in dividends per share or the dollar amount that is received by each share. It may also be quoted as a dividend yield or as a percentage of the current market price. Not all companies offer dividends, so you should also factor this in when you research on potential companies to invest in. Usually, high-growth firms don’t usually give dividends because they reinvest all profits to so that the company’s growth is sustained.
A dividend report table looks like this: (Note: The figures and names used are for illustrative purpose only).
Stock Period Amount Stock of Record Date Payable
ABC Q 20 4-30 5-15
This may seem like code to you so let’s break it down to something that can be understood:
Stock. This is the first column of a dividend report table. Stock refers to the name of the corporation that is giving the dividend. In the table above, the dividend is going to be given by company ABC.
Period. The second column specifies when the dividend is paid. Q means quarterly so this means that ABC will be giving dividends on a quarterly basis. If you find A under period, it means annually so the dividend will be paid yearly. If it’s M, the dividend will be paid out monthly while S refers to semi-annually. That means that the dividend will be paid twice a year.
Amount. This refers to the amount that will be distributed per share. In the example above company ABC will be distributing $20 for every share.
Stock of Record. This column specifies that the dividend will be given only to the investors recorded on the date specified. In the column above, the dividends will only be given the shareholders on record as of April 30. If you purchased the stock on May 1, you would not yet be eligible for dividends.
Date Payable. This refers to the date the actual date that the dividend is distributed. In the example above, the dividend will be paid on May 15.
You want to know if the company you have invested money in is profiting. To obtain this information, you need to turn to an earnings report table. The tables here compare the company’s current profits to that of the same quarter the year before. Firms usually give their earnings report on a quarterly basis and they make these available now through press releases and other means. Some of them even host a press conference for these occasions.
An earnings report table typically looks like the one below. (Note: The figures and names used are for illustrative purpose only). We’ll denote the rows with numbers for easier identification.
1. In an earnings report, the first row reveals the name of the corporation that is giving a report of its earnings. The example above shows that this earnings report is from company ABC. The letter found on the parenthesis refers to the bourse where the company’s stock is traded. N refers to the New York Stock Exchange. If the letter inside the parenthesis is A, it means that the stock is traded in the American Stock Exchange. B refers to the Boston Stock Exchange. F is Foreign Stock Exchange while M is Midwest Stock Exchange. Mo refers to Montreal Stock Exchange while O means Over- the-Counter Market. P is the Philadelphia Stock Exchange while Pa refers to the Pacific Stock Exchange. T refers to the Toronto Stock Exchange.
2. The second row which indicates the date when the quarter that is being reported will end. In our example, the quarter ends June 30. The column “This Year” refers to the current year while “Last Year” obviously refers to the previous year.
3. Revenues are reflected in the third row. Revenues or sales refer to the amount of money that the company was able to generate. The costs have not yet been subtracted from the sales. The example above shows that the company revenues for the covered quarter this year increased to $200 million from the same quarter last year when it only posted revenues of $190 million.
4. The fourth quarter is the Net Income. This refers to the profit that is earned in the quarter. To calculate the net income, the total costs are subtracted from the total revenues. So in the example above, the total revenues is $200 million. If company ABC’s expenses is $50 million then it will have a net income for the quarter of $150 million. In the same quarter of the previous year, the expenses were much greater at $75 million which led to a lower net income of $115 million.
5. The fifth row is the Share Earns. This refers to the amount of net income that is earned per outstanding share. This is a significant number when evaluating the amount of profit that each share is going to be worth.
6. Shares outstanding appear on the sixth row. This refers to the available shares for the quarter. Outstanding shares refer to the company’s stock that is held by all shareholders. If the number of shares outstanding decrease, the earnings per share would increase—something that is favorable for all investors. However, if the shares outstanding would increase then the earnings would also decrease.
You will come across a varied number of sources when conducting your research about a company. In your research, you will encounter terms and jargon that you need to understand to be able to fully comprehend what a resource is telling you. Here are some of the more important terms as well as the things you should look for when researching about a firm:
1. Stock exchange and ticker symbol. When researching, you should look at the platform where the company is trading in. The ticker symbol refers to the string of letters that represent the stock. For example, Apple which trades on the Nasdaq has a ticker symbol of AAPL.
2. Rankings on Timeliness and Safety. If you are using the research from Value Line Investment Survey, the timeliness and safety rankings are given a 1-5 ranking. Timeliness refers to Value Line’s assessment of a stock if it is a good investment at this particular time while safety refers to Value Line’s evaluation if the stock makes for a safe investment.
3. Decisions from Company Executives and Directors. Also called insider decisions, these refer to what the people who actually run the company did in the past year. For example, if the industry insiders bought more of the company stock, it’s a pretty good indication that they expect the company to do better. If they are divesting, that should prompt you to conduct more research on what is going on inside the firm.
4. Decisions from Institutional Investors. Be on the lookout if there are institutional investors that pour money into a stock. Institutional investors refer to mutual funds, pension funds and insurance companies, among others. If they invest in a company, that stock’s price increases. If they take out their investments, the stock price usually declines.
5. Financial Information about the Company. Be sure to watch out for financial figures like PE ratio, earnings per share and dividends per share. These numbers will give you an idea as to how the company is doing. Be particularly thorough about the company’s debt and its cash position. If the firm has taken on a large amount of debt you should check what it is used for. If it is using the cash for expansion then that’s probably a good thing, although you should still see the other figures of the company. Also, a high amount of debt is not going to be a bad thing for a firm if it has cash reserves in the bank to pay it off.
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