Stock marketglossary
97 terms8 groupsGreek and English
Every figure on a company page, in plain words: what it is, how it is worked out, how to read it, with an example.
Searches the name, the definition and how it is worked out, in Greek and English.
Valuation
What the market values a company at, against its earnings, sales or cash.
16 terms
- Market capitalisationWhat all of a company's shares are worth at today's price.Worked out:The share price times the number of shares.
- Enterprise value (EV)What the whole company would cost a buyer: its shares plus its debt, less its cash.Worked out:Market cap plus total debt without operating leases, less cash and short-term investments.
- P/E (price to earnings)How many dollars the market pays today for each dollar of the last twelve months' earnings.Worked out:Market cap divided by net income over the last twelve months (the same as price over earnings per share).
- P/B (price to book)Market cap against the shareholders' equity on the balance sheet.Worked out:Market cap divided by equity (assets less liabilities).
- EV/EBITEnterprise value against operating profit, before interest and taxes.Worked out:Enterprise value divided by operating profit (EBIT) over the last twelve months.
- EV/SalesEnterprise value against the last twelve months' revenue.Worked out:Enterprise value divided by revenue over the last twelve months.
- P/FCF (price to free cash flow)Market cap against the cash left over after investment.Worked out:Market cap divided by free cash flow over the last twelve months.
- Free cash flow yieldFree cash flow as a share of market cap: P/FCF turned upside down.Worked out:Free cash flow over the last twelve months divided by market cap.
- Earnings yieldEarnings as a share of market cap: P/E turned upside down.Worked out:Net income over the last twelve months divided by market cap (or 1 over the P/E).
- Discounted cash flow (DCF)A method that works out what the cash a company will produce in the future is worth today.Worked out:Estimate the free cash flow of the coming years, bring each back to today's value with a discount rate, add a terminal value, and divide by the number of shares.
- Discount rate (WACC)The return someone asks for to wait for future money: the higher it is, the less that money is worth today.Worked out:Usually the company's weighted average cost of capital (WACC): the cost of its debt and the return its shareholders ask for, each weighted by its share.
- Terminal valueThe value of all the years after the period a DCF forecasts in detail.Worked out:Usually the last year's cash flow grown at a small steady rate, divided by the rate less that growth, brought back to today's value.
- Margin of safetyThe gap between an estimate of value and the share price.Worked out:The estimated value less the price, divided by the estimated value, as a percentage.
- Fair valueAn estimate of what a share is worth from what the company earns and owns, apart from its price on the market.Worked out:In Ploutos AI's analyses it comes from several methods together: a DCF on free cash flow and the multiples of the company's peer group (else its sector), with methods of their own for banks, REITs, insurers and utilities. The range runs from the lowest method to the highest, and the one figure shown is their weighted midpoint.
- Reverse DCFA DCF solved backwards: the growth in cash flow needed to justify today's price.Worked out:It starts from the last twelve months' free cash flow, the net debt and the share count, and finds the yearly growth rate over ten years that, with steady growth of 2.5% after and a required return (7%, 9% or 11% on the Valuation tab), gives exactly today's price.
- P/S (price to sales)Market cap against the last twelve months' revenue.Worked out:Market cap divided by revenue over the last twelve months (the same as price over revenue per share).
Profitability
How much of the revenue stays as profit, and what the capital earns.
10 terms
- Gross marginWhat is left of each dollar of revenue after the cost of the product itself.Worked out:(Revenue less cost of goods sold) divided by revenue.
- Operating marginWhat is left of each dollar of revenue after running costs too (salaries, research, marketing).Worked out:Operating profit (EBIT) divided by revenue.
- Net marginWhat is left of each dollar of revenue at the end, after every cost, interest and tax.Worked out:Net income divided by revenue.
- ROIC (return on invested capital)What the company earns on all the money put into it, by shareholders and lenders alike.Worked out:Operating profit after tax divided by invested capital (equity plus debt less cash).
- ROE (return on equity)What the company earns on its shareholders' money.Worked out:Net income divided by equity.
- Return on assets (ROA)How much profit the company makes for every dollar it holds in assets.Worked out:Net income for the year divided by total assets (everything the company owns).
- EBITDAEarnings before interest, taxes, depreciation and amortisation: what the operations earn before financing costs and wear.Worked out:Operating income (EBIT) plus the depreciation of equipment and the amortisation of intangible assets.
- Stock-based compensationPay that employees and executives receive in shares or options rather than cash.Worked out:The amount the company books as an expense in the income statement and adds back in the cash flow statement, because it was not paid in cash. Read from the 10-K's cash flow statement.
- FFO (funds from operations)The earnings measure of real estate companies (REITs): net income without the depreciation of the properties and without gains on selling them.Worked out:Net income plus the depreciation of real estate, less gains (or plus losses) on property sales, as Nareit defines it. P/FFO is the price divided by FFO per share.
- Effective tax rateThe share of pre-tax profit that went in the end to income tax.Worked out:The year's income tax divided by pre-tax income. The tax note shows the bridge from the US federal statutory rate (21% since 2018) to the effective one: state taxes, profits in other countries, research credits, share-based pay and one-off items.
Growth
How revenue and earnings grow from year to year.
3 terms
- Revenue growthHow much revenue grew against the same period a year before.Worked out:(This year's revenue over last year's) less 1.
- Compound annual growth rate (CAGR)The steady yearly rate that would give the same result over a run of years.Worked out:(End value over start value) to the power of 1 over the years, less 1.
- Earnings per share (EPS)Net income shared out over each share.Worked out:Net income (to common shareholders) divided by the average share count over the period.
Debt and balance sheet
What the company owes and how easily it carries it.
10 terms
- Net debtThe company's debt less its cash. Negative means more cash than debt (net cash).Worked out:Total debt without operating leases, less cash and short-term investments. Operating leases stay out because profit and cash flow have already paid their rent. Finance leases count.
- Net debt to EBITDAHow many years of operating earnings (before depreciation) the net debt equals.Worked out:Net debt divided by earnings before interest, taxes, depreciation and amortisation (EBITDA) over the last twelve months.
- Interest coverageHow many times operating profit covers the interest the company pays.Worked out:Operating profit (EBIT) divided by interest expense over the last twelve months.
- Current ratioCurrent assets against the liabilities due within a year.Worked out:Current assets divided by current liabilities.
- Total debtAll the loans and bonds the company owes, short and long term.Worked out:Short-term borrowing plus long-term borrowing, as the balance sheet reports them.
- Cash and short-term investmentsThe money the company has available at once or almost at once.Worked out:Cash and deposits plus securities that can easily be sold within a year, from the balance sheet.
- LeasesWhat the company owes in rent for offices, stores, aircraft or equipment it uses without owning them.Worked out:Since 2019 (ASC 842) the balance sheet shows the liability: the present value of the rent still to be paid. The leases note also gives what is due in each year ahead.
- GoodwillWhat the company paid in acquisitions above the value of what it acquired, as the balance sheet carries it.Worked out:The price of an acquisition less the fair value of the assets and liabilities acquired. It is not amortised: it is tested every year, and when the business bought is worth less, an impairment is written. The note gives goodwill by segment.
- Pension funded statusHow much the company has set aside for the pensions it has promised, against what it will owe.Worked out:The value of the pension plan's assets divided by the obligation for the pensions promised (the projected benefit obligation), from the pensions note. Below 100% money is missing, and the gap is a liability of the company.
- Debt maturitiesWhen the company's debt has to be repaid, year by year.Worked out:From the debt note in the annual report: the amounts due in each of the next five years and the total after them.
Dividends and buybacks
What it hands back to shareholders, in dividends and buybacks.
10 terms
- Free cash flow (FCF)The cash the business brought in from running itself, less what it spent on equipment and buildings.Worked out:Cash from operations less capital expenditure.
- Dividend yieldThe last twelve months' dividends as a share of today's price.Worked out:Regular dividend per share over the last twelve months divided by the share price.
- Payout ratioThe share of earnings the company pays out as dividends.Worked out:Dividend per share divided by earnings per share (for a REIT, by FFO per share).
- Dividend cover by free cash flowHow many times free cash flow covers what the company pays in dividends.Worked out:Free cash flow divided by total regular dividends.
- Buyback yieldWhat the company spent buying back its own shares, as a share of market cap.Worked out:Share buybacks over the last twelve months divided by market cap.
- Shareholder yieldDividends and buybacks together, as a share of market cap.Worked out:Dividend yield plus buyback yield.
- Special dividendA dividend the company pays once, on top of its regular one.Worked out:Not worked out: the company announces it as special, or it shows as a payment far above the usual ones.
- Ex-dividend dateThe first day the share trades without the right to the next dividend.Worked out:Set by the company when it declares the dividend.
- Change in share countHow much the number of the company's shares rose or fell over a year.Worked out:Shares today divided by shares a year earlier, less one, as a percentage. Splits are left out.
- DilutionWhen the share count grows, each share owns a smaller piece of the company.Worked out:The change in shares outstanding over a period, usually five fiscal years, from the company's filings. New shares come from stock-based pay, acquisitions paid in stock and share issues. Buybacks reduce them.
Filings and share structure
The SEC filings, and how shares and ADRs are read.
22 terms
- 10-KThe annual report every US-listed company files with the SEC.Worked out:It holds the year's audited financial statements, a description of the business and its risks.
- 10-QThe quarterly report a US-listed company files for each of its first three quarters.Worked out:The quarter's financial statements, reviewed rather than fully audited. The fourth quarter is covered by the 10-K.
- 8-KThe notice a company files with the SEC when something material happens between reports.Worked out:Each 8-K names one or more numbered items: 2.02 results, 5.02 changes in officers, 2.01 an acquisition or sale, for example.
- Form 4The statement an officer, director or large holder files when they buy or sell the company's shares.Worked out:Filed within two business days, with the amount, the price and a transaction code (P a purchase, S a sale, for example).
- 13FThe quarterly list of US stock holdings every manager with over $100 million files.Worked out:Filed up to 45 days after each quarter end, with the shares and their value.
- ADR (American depositary receipt)A security traded in the US that stands for shares of a foreign company.Worked out:Each ADR stands for a set number of the company's shares (5 for TSMC, for example), printed in its annual report.
- Stock splitDividing each share into several, without changing what the company is worth.Worked out:In a 10-for-1 split each share becomes ten and the price becomes a tenth.
- Trailing twelve months (TTM)A figure for the four most recent quarters together, rather than for the fiscal year.Worked out:The sum of the last four quarters the company has filed (from its 10-Qs and 10-K).
- Insider tradesPurchases and sales of the company's shares by its officers and directors.Worked out:They are reported to the SEC on Form 4, within two business days of the trade.
- What the company measures itselfThe operating figures management reports in its annual report beyond the financial statements: subscribers, deliveries, stores, backlog.Worked out:A language model reads the Management's Discussion and Analysis of each 10-K once and copies every metric with the sentence it took it from. A figure is published only when that sentence is in the report verbatim and carries the figure, when the company reports the metric in two consecutive years, and when the next report does not contradict it.
- Business segmentsThe parts the company itself splits its revenue and operating income into in its annual report.Worked out:From each 10-K's XBRL (ASC 280): every segment or product with its revenue and, where the company gives it, its operating income, every year since 2009 (on the page the last three for everyone, all of them with Ploutos Investor). Each year is read from the latest report that carries it, so a renamed segment shows in its current form.
- Institutions by quarterHow many managers reported a position in the stock each quarter, how many shares and dollars between them, and who entered, left, added or trimmed.Worked out:From the SEC's Form 13F data sets, every quarter since 2013 (on the page the last four for everyone, all of them with Ploutos Investor): the long positions of every manager with more than $100 million under management, as filed up to 45 days after the quarter end. The stock is matched by its CUSIP. The flows compare each manager with the quarter before.
- Say-on-payThe shareholders' advisory vote on the executives' pay at each annual meeting.Worked out:For as a share of for plus against, as most companies state it. Abstentions and broker non-votes (brokers' clients' shares with no instructions) do not count. The counts are read from the 8-K (item 5.07) the company files a few days after the meeting.
- Pay versus performanceThe proxy statement's table that sets the chief executive's pay beside the stock's run, year by year.Worked out:Since 2023 every proxy (DEF 14A) gives it with structured data: total compensation as the summary table states it, the "actually paid" figure (the same with shares and options valued at year end), the average of the other named officers, what $100 in the stock and in the company's chosen peer group became, and the measure the company ties pay to.
- Rule 10b5-1 planA pre-arranged schedule of share purchases or sales by an insider, executed on preset dates and prices.Worked out:SEC Rule 10b5-1 shields the insider from a charge of trading on inside information, provided the plan was agreed when they had none and waits at least 90 days before the first trade. Since 2023 every 10-Q and 10-K states with structured data who adopted or ended a plan, when, for how many shares and until when.
- Revenue by geographyHow the company's revenue splits across the countries or regions it itself sets apart.Worked out:From each 10-K's XBRL, the geographical axis of the revenue note: US, Europe, China, rest of world, or however the company cuts it, every year. Some companies give the customer's country, others the seat of the subsidiary that bills.
- SEC lettersThe letters in which the SEC asked for explanations of a filing (UPLOAD) and the company's answers (CORRESP).Worked out:The SEC reviews every company's filings at least once every three years. When it asks for clarifications, the correspondence is published on EDGAR a few weeks after the review closes. The page lists every one in the company's record, with links.
- Risk factorsThe 10-K chapter (Item 1A) where the company writes what could harm its business.Worked out:Each factor has a bold heading and a paragraph. The analysis compares the headings of the two latest 10-Ks and shows which were added and which were removed.
- Loss contingenciesAmounts the company may pay for lawsuits, fines or guarantees, depending on how they end.Worked out:From the notes to the statements on commitments and contingencies, as the SEC's Financial Statement and Notes data sets give them: what it has already booked as a provision, what it estimates as a possible loss and its range. The analysis also shows them as a share of the company's market value.
- Form 144The notice to the SEC that an officer or a large holder intends to sell shares, filed before the sale.Worked out:It is filed when the shares to be sold within three months number more than 5,000 or are worth more than $50,000. It states how many shares, their value, how they were acquired (as pay, for example) and through which broker they will be sold.
- DEF 14A (proxy statement)The document a company sends its shareholders before the annual meeting: what is put to the vote, who sits on the board and what the top executives are paid.Worked out:It is filed with the SEC every year before the annual meeting. It holds the executive pay table, since 2023 the Pay versus Performance table in structured data, the items put to the vote (directors, auditor, say-on-pay) and who holds more than 5% of the shares.
- Going concern doubtThe statement by management or the auditor that there is substantial doubt the company can keep operating for the next twelve months.Worked out:It is written into the annual or quarterly report when the cash and the financing the company has secured do not cover the next year's obligations. The company page looks for it in the filings of the last two years with the SEC's full-text search.
ETFs and bonds
Funds, what they hold, what they cost, and how their bonds are read.
14 terms
- ETF (exchange-traded fund)A fund that holds a basket of stocks or bonds and trades on the exchange like a single share.Worked out:Its price follows the value of what it holds. Most of them track an index, such as the S&P 500.
- Expense ratioThe percentage a fund keeps each year for its costs.Worked out:The yearly management and running costs divided by the fund's average assets. It is taken little by little from the fund's value.
- Form N-PORTThe filing in which US mutual funds and ETFs report to the SEC what they hold.Worked out:Each fund files one per quarter, with every holding, its quantity and its value. It is made public about 60 days later.
- ETF overlapHow much of the same holdings two ETFs share.Worked out:For every stock held by both, take the smaller of its two weights, and add them up.
- Holding weightWhat share of a fund's value sits in one stock or bond.Worked out:The value of the holding divided by the fund's total value, as its filing reports it.
- Yield to maturityA bond's yearly return if it is bought at today's price and held until it matures.Worked out:The rate at which the coupons and the repayment are worth today exactly the bond's price. For a fund, the average of its bonds, weighted by their share.
- Duration (rate sensitivity)Roughly how much the price of a bond or a bond fund changes when interest rates move by one point.Worked out:It is measured in years. A duration of 6 means roughly a 6% fall in price if rates rise one point, and roughly a 6% rise if they fall one.
- Credit qualityHow likely the issuer of a bond is judged to pay everything it owes.Worked out:It is expressed in rating agencies' grades, from AAA (the highest) down to D (in default). BBB and above is called investment grade, below it high yield.
- 30-day SEC yieldA standardised bond fund yield, worked out the same way by every fund so they can be compared.Worked out:The interest income of the last 30 days, less the fund's expenses, as a yearly percentage of the price, by the formula the SEC sets.
- Look-throughWorking out what someone really owns when they hold ETFs: the companies inside the funds, with their weights.Worked out:For each ETF, the amount someone holds times the weight of each position in the fund's latest N-PORT filing. Amounts in the same company from different ETFs and from stocks held directly are added together.
- Covered callsA fund that holds stocks and sells others the right to buy them at a set price, collecting a sum (the premium).Worked out:The fund collects the premium every month and pays it out as a distribution. If the stock or the index rises above the option's price, the gain beyond it goes to the option's buyer. The N-PORT filing shows the options as positions with a negative value.
- Structured notes (ELNs)Notes a bank issues that pay according to an index's path, often with sold options built into them.Worked out:The N-PORT filing shows them as bonds with the bank as issuer. Some income funds use them instead of selling call options themselves, and the ETF report counts them as a share of the fund.
- Securities lendingWhen a fund lends shares it holds to others, usually for short sales, for a fee and against collateral.Worked out:The N-PORT filing states which positions are on loan and the collateral the fund received. The fee is split between the fund and the lending agent.
- Fund flowsHow much money came into a fund from investors minus what went out, over a period.Worked out:From the monthly lines of the N-PORT filing: sales of new shares minus redemptions. Changes in the prices of the holdings do not count, so a fund can grow from a rising market while losing investors.
Market and results
The index, the sectors, results announcements and how the picks are measured.
12 terms
- S&P 500The index of about 500 of the largest listed US companies, the usual yardstick for the US market.Worked out:Each company counts in proportion to the value of its freely traded shares. Here it is measured through the SPY ETF, which tracks it.
- SectorThe group of companies with the same core business, such as technology, healthcare or energy.Worked out:The market is split into eleven sectors. A sector's move is the average of its companies, each weighted by its value.
- Market breadthHow many companies rose and how many fell on a day.Worked out:Among the 600 largest US companies, the count of those that closed up, down and about unchanged.
- Earnings dateThe day the company announces its results for the quarter.Worked out:Results come out in a press release and an 8-K, before the market opens or after it closes. The 10-Q with all the detail follows, usually within a few weeks.
- Earnings reactionHow much the shares moved in the first session after a results release.Worked out:The change in price from the close before the release to the close of the first session after it, next to the S&P 500's move on the same day.
- Price returnHow much a stock's price changed from one day to another, without the dividends.Worked out:The price at the end divided by the price at the start, less one, as a percentage.
- Excess return over the index (alpha)How much better or worse a pick did than the S&P 500 over the same period.Worked out:The pick's return less the S&P 500's return from the same day to the same day, in percentage points.
- Outperform, Market Perform, UnderperformThe six ratings a Ploutos AI stock analysis ends in: where the stock stands under a published rule, from how far the price is from our estimated fair value and from the fundamentals score.Worked out:Strong Outperform and Outperform: the price is well below our estimated fair value and the fundamentals score is high enough. Market Perform: no other rung applies, usually because the price is near the estimated fair value. Monitor: no published fair-value estimate, or a high score without enough margin of safety. Underperform and Strong Underperform: a low fundamentals score, or a price well above the estimated fair value. The language model does not choose them: software sets them from the margin of safety and the fundamentals score, with the thresholds the methodology publishes.
- Percentage points (pp)The difference between two percentages, measured by subtraction.Worked out:One percentage minus the other. A weight going from 20% to 25% rose by 5 percentage points, while in percentage terms it rose by 25%.
- Total returnThe price change together with the dividends, as if every dividend were reinvested in the same share.Worked out:Each dividend buys shares on its ex-dividend day. The total return is the value at the end divided by the value at the start, less one.
- IPO and S-1The first time a company sells shares to the public and lists on an exchange, and the document with which it asks the SEC.Worked out:The company files a registration statement (S-1, or F-1 for a foreign company) with its statements, its risks and what it will do with the money. Once the price is set, it files the final prospectus (424B4) and the share starts to trade. On the stocks hub, who filed and who priced come from EDGAR's daily index of filings.
- Median and percentileThe median is the value in the middle of a group. A percentile says what share of the group has a lower value.Worked out:All the values are put in order. The median is the middle one, with half below it and half above. The 90th percentile is the value higher than 90% of the group.
Related pages
The other pages on US stocks, free to read. On the company pages, the last three fiscal years are open to everyone, five with a free account, and every year with Ploutos Investor.
US stocksThe market today, the sectors, the largest companies and the week's results.The market's sectorsThe 11 sectors side by side: returns, share of the market, median P/E and dividend.Compare stocksTwo companies side by side: price over up to ten years, with and without dividends, and every figure.US dividend stocksEach dividend's yield next to whether the company's cash covers it and whether it was ever cut.
Explanations of terms for learning, with examples from SEC filings.