Knowledge base

The total stock-market value of a company: share price times number of shares. Shows how 'big' the company is on the market.

Net profit divided by the number of shares. Shows how much profit is attributable to a single share.

Total income from selling products and services — the 'top line' of the income statement.

Change in revenue versus the prior year, in percent. Shows how fast the business is growing or shrinking.

What's left after all costs, interest and taxes — the 'bottom line' of the income statement.

The highest price of the stock over the past 12 months. Purely a historical reference point, not a forecast.

The lowest price of the stock over the past 12 months. Historical reference for the trading range.

A share of ownership in a company. Owning a stock makes you a part-owner, with a claim on a share of the profit (e.g. via dividends).

An exchange-traded fund that usually tracks an index (e.g. MSCI World). Cheap, broadly diversified and easy to buy.

A basket of many stocks whose average performance represents a market — e.g. DAX (40 German firms) or S&P 500 (500 US firms).

Bull market = sustained rising prices (optimism). Bear market = sustained falling prices (typically from –20% downward).

The percentage return on an investment — from price gains and dividends — relative to the capital invested.

Slang for the largest, most established and financially solid companies on an exchange (e.g. DAX 40, Dow 30).

Share price divided by earnings per share. Indicates how many years of earnings are priced into the stock — a rough gauge of whether it looks cheap or expensive.

P/E based on next year's expected earnings. Values the stock looking forward instead of backward.

P/E divided by expected earnings growth. Puts valuation in relation to growth — below 1 is often seen as attractive, but very sensitive to estimates.

Share price divided by book value per share. Shows how much premium the market pays over the company's accounting equity.

Market cap divided by annual revenue. Useful for companies that make little (or no) profit yet.

Average price target that analysts publish for the stock. A professional opinion — not a guarantee.

Highest published analyst price target. Represents the most optimistic case.

Lowest published analyst price target. Represents the most pessimistic case.

Aggregated analyst stance (e.g. buy, hold, sell). A reference point, not personal advice.

Revenue minus direct production costs, as a percentage of revenue. Shows what's left of sales after the pure cost of goods.

Operating income divided by revenue. Shows how profitable the core business is before interest and taxes.

Net profit divided by revenue. Shows what fraction of sales becomes actual profit after all costs, interest and taxes.

Profit relative to shareholders' equity. Shows how efficiently the money invested by owners is being put to work.

Operating profit relative to all invested capital (equity + debt). Measures how well a company works with the capital it has available.

Cash flow from operations minus required capital investments. The cash truly free for dividends, buybacks or paying down debt.

Sum of all short- and long-term debt of the company. Best judged relative to cash flow.

Cash and short-term investments on hand. Buffer for tough times and ammunition for investments.

Annual dividend divided by share price, in percent. Shows how much cash payout you get per invested dollar.

Share of profit paid out as dividends. High values leave little buffer for weaker years.

A profit distribution from the company to its shareholders — usually once a year or quarterly, paid in cash.

Total debt divided by shareholders' equity. Shows how much a company relies on debt versus its own money — higher values mean higher risk.

Measures how much a stock swings compared to the overall market. 1 = like the market, >1 = more volatile, <1 = calmer.

A measure of how much a price fluctuates. High volatility = large swings up and down.

Spreading capital across many different securities, sectors and regions to reduce the risk of single failures.

How quickly and without price impact a security can be bought or sold. Large firms are usually very liquid.

The broader a portfolio is spread (securities, sectors, countries), the smaller the risk of individual failures becomes.