How to read and understand stock tables

The stock tables in major business publications, such as The Wall StreetJournal and Investor’s Business Daily, are loaded with information that canhelp you become a savvy investor — if you know how to interpret them. Youneed the information in the stock tables for more than selecting promisinginvestment opportunities. You also need to consult the tables after you investto monitor how your stocks are doing. If you bought HokySmoky commonstock last year at $12 per share and you want to know what it’s worth today,check out the stock tables.

If you look at the stock tables without knowing what or why you’re looking, it’s the equivalent of reading War and Peace backwards through a kaleidoscope. Nothing makes sense. But I can help you make sense of it all (well, at least the stock tables!). Table1 shows a sample stock table for you to refer to as you read the sections that follow.

Every newspaper’s financial tables are a little different, but they give you basically the same information. Updated daily, this section is not the place to start your search for a good stock; this section is usually where your search ends. The stock tables are the place to look when you already know what you want to buy and you’re just checking to see the most recent price, or to look when you already own it and you want to check the latest stock price. Each item gives you some clues about the current state of affairs for that particular company. The sections that follow describe each column to help youunderstand what you’re looking at.

52-week high

The column labeled “52-Wk High” (refer to Table1) gives you the highest price that particular stock has reached in the most recent 52-week period. Knowing this price lets you gauge where the stock is now versus where it has been recently. SkyHighCorp’s (SHC) stock has been as high as $21.50, while its last (most recent) price is $21.25, the number listed in the “Day Last” column. (Flip to the “Day Last” section for more on understanding this information.) SkyHighCorp’s stock is trading very high right now because it’s hovering right near its overall 52-week high figure.

Now, take a look at DoinBadlyCorp’s (DBC) stock price. It seems to have tumbled big time. Its stock price has had a high in the past 52 weeks of $83, but it’s currently trading at $33.50. Something just doesn’t seem right here. During the past 52 weeks, DBC’s stock price fell dramatically. If you’re thinking about investing in DBC, find out why the stock price fell. If the company is a strong company, it may be a good opportunity to buy stock at a lower price. If the company is having tough times, avoid it. In any case, research the company and find out why its stock has declined.

52-week low

The column labeled “52-Wk Low” gives you the lowest price that particular stock reached in the most recent 52-week period. Again, this information is crucial to your ability to analyze stock over a period of time. Look at DBC in Table1, and you can see that its current trading price of $33.50 is close to its 52-week low.

Keep in mind that the high and the low prices just give you a range of how far that particular stock’s price has moved within the past 52 weeks. They could alert you that a stock has problems, or they could tell you that a stock’s price has fallen enough to make it a bargain. Simply reading the 52-Wk High and 52-Wk Low columns isn’t enough to determine which of those two scenarios is happening. They basically tell you to get more information before you commit your money.

Name and symbol

The “Name (Symbol)” column is the simplest in Table1. It tells you the company name (usually abbreviated) and the stock symbol assigned to the company. When you have your eye on a stock for potential purchase, get familiar with its symbol. Knowing the symbol makes it easier for you to find your stock in the financial tables, which list stocks in alphabetical order by the company’s name. Stock symbols are the language of stock investing, and you need to use them in all stock communications, from getting a stock quote at your broker’s office to buying stock over the Internet.

Dividend

Dividends (shown under the “Div” column in Table1) are basically payments to owners (stockholders). If a company pays a dividend, it’s shown in the dividend column. The amount you see is the annual dividend quoted for one share of that stock. If you look at LowDownInc (LDI) in Table1, you can see that you get $2.35 as an annual dividend for each share of stock that you own. Companies usually pay the dividend in quarterly amounts. If I own 100 shares of LDI, the company pays me a quarterly dividend of $58.75 ($235 total per year). A healthy company strives to maintain or upgrade the dividend for stockholders from year to year. In any case, the dividend is very important to investors seeking income from their stock investment. Investors buy stock in companies that don’t pay dividends primarily for growth.

Volume

Normally, when you hear the word volume on the news, it refers to how much stock is bought and sold for the entire market. (“Well, stocks were very active today. Trading volume at the New York Stock Exchange hit 2 billion shares.”) Volume is certainly important to watch because the stocks that you’re investing in are somewhere in that activity. For the “Vol” column in Table1, though, the volume refers to the individual stock.

Volume tells you how many shares of that particular stock were traded that day. If only 100 shares are traded in a day, then the trading volume is 100. SHC had 3,143 shares change hands on the trading day represented in Table1. Is that good or bad? Neither, really. Usually the business news media only mention volume for a particular stock when it’s unusually large. If a stock normally has volume in the 5,000 to 10,000 range and all of a sudden has a trading volume of 87,000, then it’s time to sit up and take notice.

Keep in mind that a low trading volume for one stock may be high trading volume for another stock. You can’t necessarily compare one stock’s volume against that of any other company. The large-cap stocks like IBM or Microsoft typically have trading volumes in the millions of shares almost every day, while less active, smaller stocks may have average trading volumes in far, far smaller numbers.

The main point to remember is that trading volume that is far in excess of that stock’s normal range is a sign that something is going on with that stock. It may be negative or positive, but something newsworthy is happening with that company. If the news is positive, the increased volume is a result of more people buying the stock. If the news is negative, the increased volume is probably a result of more people selling the stock. What are typical events that cause increased trading volume? Some positive reasons include the following:

Good earnings reports: A company announces good (or better-thanexpected) earnings.

A new business deal: A company announces a favorable business deal, such as a joint venture, or lands a big client.

A new product or service: A company’s research and development department creates a potentially profitable new product.

Indirect benefits: A company may benefit from a new development in the economy or from a new law passed by Congress. Some negative reasons for an unusually large fluctuation in trading volume for a particular stock include the following:

Bad earnings reports: Profit is the lifeblood of a company. When a company’s profits fall or disappear, you see more volume.

Governmental problems: The stock is being targeted by government action (such as a lawsuit or Securities and Exchange Commission probe).

Liability issues: The media report that a company has a defective product or similar problem.

Financial problems: Independent analysts report that a company’s financial health is deteriorating. Check out what’s happening when you hear about heavier than usual volume (especially if you already own the stock).

Yield

In general, yield is a return on the money you invest. However, in the stock tables, yield (“Yld” in Table1) is a reference to what percentage that particular dividend is to the stock price. Yield is most important to income investors. It’s calculated by dividing the annual dividend by the current stock price. In Table1, you can see that the yield du jour of ValueNowInc (VNI) is 4.5 percent (a dividend of $1 divided by the company’s stock price of $22). Notice that many companies have no yield reported; because they have no dividends, yield is zero.

Keep in mind that the yield reported in the financial pages changes daily as the stock price changes. Yield is always reported as if you’re buying the stock that day. If you buy VNI on the day represented in Table1, your yield is 4.5 percent. But what if VNI’s stock price rises to $30 the following day? Investors who buy stock at $30 per share obtain a yield of just 3.3 percent. (The dividend of $1 is then divided by the new stock price, $30.) Of course, because you bought the stock at $22, you essentially locked in the prior yield of 4.5 percent. Lucky you. Pat yourself on the back.

P/E

The P/E ratio is the ratio between the price of the stock and the company’s earnings. P/E ratios are widely followed and are important barometers of value in the world of stock investing. The P/E ratio (also called the “earnings multiple” or just “multiple”) is frequently used to determine whether a stock is expensive (a good value). Value investors (such as yours truly) find P/E ratios to be essential to analyzing a stock as a potential investment. As a general rule, the P/E should be 10 to 20 for large-cap or income stocks. For growth stocks, a P/E no greater than 30 to 40 is preferable.

In the P/E ratios reported in stock tables, price refers to the cost of a single share of stock. Earnings refers to the company’s reported earnings per share as of the most recent four quarters. The P/E ratio is the price divided by the earnings. In Table1, VNI has a reported P/E of 12, which is considered a low P/E. Notice how SHC has a relatively high P/E (76). This stock is considered too pricey because you’re paying a price equivalent to 76 times earnings. Also notice that DBC has no available P/E ratio. Usually this lack of a P/E ratio indicates that the company reported a loss in the most recent four quarters.

Day last

The “Day Last” column tells you how trading ended for a particular stock on the day represented by the table. In Table1 , LDC ended the most recent day of trading at $41. Some newspapers report the high and low for that day in addition to the stock’s ending price for the day.

Net change

The information in the “Net Chg” column answers the question “How did the stock price end today compared with its trading price at the end of the prior trading day?” Table1 shows that SHC stock ended the trading day up 25 cents (at $21.25). This column tells you that SHC ended the prior day at $21. On a day when VNI ends the day at $22 (up 10 cents), you can tell that the prior day it ended the trading day at $21.90.