Stock Market Terms and Definitions

Closing Price - Last traded market price for the company or index for that day. 


Example: Ayala Land was traded between 15 to 16 yesterday. When the stock market closed at 12:10 nn, the price of Ayala Land is 15.5, then the closing price of Ayala Land is 15.5.


Target Price - Target price is a company's estimated worth or fair market value as computed by various ways specific to its industry (i.e DCF, NAV, P/BV, PER). 



Example:Ayala Land is currently trading at 15 per share. Analysts will estimate how much will be the price of Ayala Land in the future.


Outstanding Shares - Also referred to as Issued Shares, this number acknowledges the number of shares currently held by shareholders. This includes shares held by public and those restricted or held by the company's officials and insiders. 


Example: I incorporate a company with 100,000 shares, out of these 100,000 shares, I only paid 5,000 shares. That 5000 shares is called Outstanding Shares.

Market Capitalization - Market Capitalization is computed by multiplying its Outstanding Shares by its market price. It is the value that an entity would theoretically have to pay to buy the entire company. 


Example: Ayala Land has 5,000 outstanding shares and is trading at 15.5. The market capitalization is 77,500 (5000x15.5)

Sales - Sales is the amount of revenues a company registers in a period. Increasing revenues is key to a company's growth. Also known as a company's top line.

Net Profit - Net profit is the amount a company earns in a period. Also known as net income, earnings or a company's bottom line.

Earnings Per Share (EPS) - Earnings per share is the amount of net profit for each outstanding share.

Net Profit Margin - Net profit margin is a measure of profitability. This is calculated by dividing net income by the total sales. The higher this percentage is, then the more profitable the company because a much bigger portion of sales ends up as earnings for the shareholder.

PE Ratio (PER) - The PE ratio is the most commonly used valuations measure. It shows how much is paid for each unit of earnings. The PE of a stock describes the price of a share relative to the earnings of the underlying asset. The lower the PE, the less you have to pay for the stock, relative to what it earns.

Dividend Yield - The dividend yield is a measure of the return on investment that the dividend gives. It is the dividend per share divided by the price per share.






Price to Book value (P/BV) - Price to book value is calculated by dividing the Market capitalization by the latest book value (book value is simply total assets minus liabilities.) It measures the amount paid for each peso of book value, which is the same as stockholder's equity.

ROE (for current fiscal year) - Return on Equity is the return on investment that the company is generating on funds invested by stockholder's. It is computed by dividing net income by stockholder's equity.