The stock price summary is the first information you see when researching a stock. Whether you use a free site like Yahoo Finance, a premium research site, or just your online broker, this information defines a stock every day. And is a great place to start a “Stock Basics” series to show how to sift out the important information when doing your own stock research.
The stock price summary is simply a quick overview of a stocks performance. It tells us where the stock is at right now, what it has done for the day so far and over the past year.
The goal of this initial research is to eventually find a stock that is going to make us some money, from either a rising stock price, dividends, or both. We thought we’d use McDonald’s Corp. (NYSE: MCD) as an example since its a well known company. A few questions we might want answered are where is the stock price at now? How close to it’s one year high is it? Does it pay a dividend? And what’s the yield?
Reviewing The Terms
Last Trade – Shows the last price the stock traded (is usually delayed by 15 min). You can see that the last trade price is 82.88 at 2:08PM EDT.
Change – Shows the price difference between the last trade and the previous close. The change is usually color coded, green for a higher price, red for a lower price. The McDonald’s change shows an increase of 0.24 or .29%.
Open – Shows the initial trade price when the market opened.
Bid – Shows the price and number of shares that the most recent buyer is willing to pay (or bid) for those shares.
Ask – Shows the price and number of shares that the most recent seller is trying to sell (or ask) for those shares.
Day’s Range – Shows the highest (82.90) and lowest (82.51) price the stock has traded at throughout the day. the larger the range, the more volatile the stock has been trading. Watching this over a few days will give you an idea how volatile (or risky) a stock may be.
52-Week Range – Shows the highest (83.08) and lowest (65.31) trading prices for the stock over the past 52 weeks. We can see that McDonald’s is trading very close to it’s 52-week high.
Volume – Shows the total number of shares that have been traded so far during the day.
Average Volume – Shows the average volume per day over the past 3 months.
Market Cap – Shows the current market value of the company, in this case it’s $85.99 billion. Market cap is figured by multiplying the current share price with the total number of outstanding shares.
P/E – Shows the P/E ratio (price/earnings ratio) which measures the stock price relative to the company’s earnings and is one of several ways to value a stock. McDonald’s has a P/E ratio of 17.51.
Dividend – Shows the current dividend, if any, that the company pays per share each year. Most companies will pay out one-quarter of the dividend every three months. McDonald’s currently pays a dividend of $2.44 per share.
Yield –Shows the percentage yield the dividend produces. Yield is determined by dividing the dividend by the current stock price. So one share of McDonald’s stock has a dividend yield of roughly 3%.
What Does It Tell Us
Based off this information, the stock price summary tells us a a few important things. If we use the McDonald’s stock as an example. It shows us that it is a large cap company through it’s market cap. The P/E ratio tells us that buyers of the stock believe the company is still growing but by how much we’re not sure yet. The relatively high amount of volume tells us the stock is easily bought and sold. The low day’s range tells us that it is probably not a stock for day traders, but rather for mid to long term investors. And the high dividend yield tends to back that assumption.
If we are looking for a safer, large cap stock to invest in for the long term, McDonald’s would certainly be a good candidate. With the stock price trading near the 52-week high, we may want to wait before jumping in and buying the stock right here. We’d have to dig a little deeper through the research to find out.
It takes a bit of reading between the lines to decipher everything, but with a little practice you’ll be reviewing stocks like a pro. Every research site is a little different as far as what information is given, but this should give you a good idea of what to expect to see in a stock price summary.
