Valuation & fundamentals: glossary

  • Room 04
  • 30 terms

The terms

  • 8-KAn 8-K is the filing a US company must make within four business days of a material event: a merger, a CEO leaving, a lawsuit, results. It is often…
  • 10-K and 10-QA 10-K is the audited annual report a US listed company files with the SEC; a 10-Q is the unaudited quarterly version. Both are on EDGAR the second…
  • 13F filingA 13F is the quarterly filing every US institutional manager with over $100 million must make, listing its stock holdings, due 45 days after the…
  • BetaBeta measures how much a stock has moved relative to the market: 1.5 means it has historically moved 1.5% for each 1% in the S&P 500. High-beta…
  • Book valueBook value is total assets minus total liabilities on the balance sheet, what shareholders own on paper. For a bank it means something, and a bank…
  • BuybackA buyback is a company buying its own shares and cancelling them, so the same profit is spread over fewer shares and EPS rises. US companies return…
  • Consensus estimateThe consensus estimate is the average analyst forecast for a company's earnings or an economic number. Markets price the consensus before the…
  • Dividend yieldDividend yield is the annual dividend divided by the share price; a $2 dividend on a $50 stock is 4%. It rises when the price falls, so the highest…
  • Earnings beat and missA beat is results above the consensus estimate; a miss is below. Most large US companies beat most quarters because guidance is set to be beaten, so…
  • Earnings callThe earnings call is the conference call where management discusses results and takes analyst questions, usually within an hour or two of the…
  • Earnings season / earnings reportEarnings season is the weeks after each quarter ends when most US companies report, starting with the big banks around mid-January, April, July and…
  • EBITDAEBITDA is earnings before interest, taxes, depreciation and amortisation: operating profit with debt costs and non-cash charges added back. It…
  • Enterprise valueEnterprise value is market capitalization plus debt minus cash: the price of buying the whole business, lenders included. EV/EBITDA compares…
  • EPSEPS is earnings per share: net profit divided by shares outstanding. On results day it is compared with the published consensus and the whisper…
  • Form 4Form 4 is the SEC filing a company insider must make within two business days of buying or selling the company's shares. It is near real time and…
  • Forward guidance (Fed)Forward guidance is the Fed telling the market roughly what it plans to do next, so rate moves arrive pre-priced. When a chair refuses to give it…
  • Forward P/EForward P/E is the share price divided by the earnings analysts expect over the next twelve months. It is built on a forecast that the company…
  • Free cash flowFree cash flow is the cash a business brings in from operations minus what it spends on equipment and buildings. Accounting shapes earnings; cash…
  • Gross marginGross margin is revenue minus the direct cost of making the product, as a percent of revenue. It shows pricing power, and a falling one on results…
  • Guidance (earnings guidance)Guidance is a company's own forecast for the next quarter or year, given with results. The quarter was priced weeks ago; the guide moves the forward…
  • Net interest incomeNet interest income is what a bank earns on the gap between what it pays depositors and what it charges borrowers. Higher rates lift it while making…
  • Operating marginOperating margin is operating profit as a percent of revenue: what is left after making the product and running the company, before interest and…
  • Order backlog (remaining performance obligations)An order backlog is money customers have committed but not yet been billed for, called remaining performance obligations in US filings. It is an…
  • P/E ratioThe P/E ratio is share price divided by the last twelve months of earnings per share; 25 means $25 for each dollar of annual profit. It moves on a…
  • Payout ratioPayout ratio is the share of earnings paid out as dividends; $1 paid on $4 earned is 25%. Above 100% the dividend comes from savings or debt. Check…
  • PEG ratioThe PEG ratio is P/E divided by expected annual earnings growth in percent, so a P/E of 30 with 30% growth gives a PEG of 1. It rests on a growth…
  • Price-to-sales ratioThe price-to-sales ratio is market value divided by annual revenue, used for companies with no profit yet, where P/E means nothing. Ten means you…
  • RevenueRevenue is the total money a company takes in from sales before any costs, the top line. Growth companies are judged on it first and on the revenue…
  • SEC filingsSEC filings are the documents US listed companies must submit: 10-K annual, 10-Q quarterly, 8-K within four business days of a material event, Form…
  • Whisper numberThe whisper number is the unofficial earnings figure traders actually expect, usually above the published consensus for a popular stock. A company…