Reading the Stock Tables

I l @ ve RuBoard

The closest thing to a computer printing of numbers that are randomly generated yet appear to be compiled by humans is the stock tables listed in the pages of the newspaper. With their masses of numbers , acronyms, and fine print, these tables can look overwhelming to the uninitiated reader.

Here's the secret, though: You don't need to know very much about the stock tables to use them. You just have to know enough to find the information you are looking for. Think of them as a phone book for the nearest large city. First, the phone book lists the name of every single person who lives in that city and who wants to be included in the book. By the same token, the stock tables list the name of every stock (well, not every stock, but you get the idea) in that market. For each name listed in the phone book, there is a phone number and an address. Then the same kind of information is given for businesses. The stock tables also list information relevant to the stock. When you compile all that information, you get a whole book, or in the case of financial information at least a couple of pages.

You are not frightened by the phone book because you know that you don't need to know everything in it, just one or two lines, and you know how to find that information. The following explanations will enable you to do the exact same thing in the stock tables: how to dive right in and come up with information specific to your stock. The sample stock table contains the information considered standard in a stock table. This information is available from The Wall Street Journal, The New York Times, or your local newspaper in a virtually identical format.

Stock Name

Reading from the left in the table, go to the third column. These are the stock names , or the names of the companies whose stocks are listed. Remember, not every single stock is listed, but as a newer investor it is a pretty safe bet that your stock will be popular enough to be up there. Because of a lack of space, the tables take a lot of liberty with abbreviations and acronyms, and they ram words together, so you will have to be kind of creative when looking up your stock. Alaska Airlines, for example, is listed as AlaskaAir. That's not so hard, but American Airlines is listed under its parent company name of AMR. Like the phone book, the stock tables do assume that you know at least the name of the company whose stock you want to look up.

Plain English

The stock name is listed in the stock tables of the daily newspaper. The name usually appears as an abbreviation or an acronym. Motorola for example, is noted as MOT, Federal Express is noted as FDX, and Hertz Rent A Car is noted as HRZ.

TIP

The stock symbol assigned to American Airlines was AMR. When management created a parent company for the airline, the new holding company was christened with the stock symbol as a name.

52 Week				Yld		Vol				Net
Hi	Lo	Stock	Sym	Div	%	PE	100s	Hi	Lo	Close	Chg
25 13/16	19 3/8	ABN Am ADR	ABN	1.23e	6.2		566	20	19 ¾	9 7/8	“1/8
25 ¾	19 3/16	ABN AM pfA
25 ½	18 7/8	ABN Am pfA
s39	20 99/128	AMR	AMR	Stk		5	8278	33 9/16	31 7/8	31 15/16	“1 3/16
61	35 ½	AT&T	T	.88	2.5	19	181179	36 9/16	35 ½	35 ¾	“1 3/16
36	27 11/16	AT&T Wrls	AWE				64745	27 13/16	26 ½	26 ½	“1 ¼
48 15/16	29 3/8	AbbotLab	ABT	.76f	1.8	26	54513	41 7/8	40 1/8	41 3/8	+13/16
s49 11/16	8 7/8	Abercrombie A	ANF			6	15195	9 ¼	8 7/8	8 78	“ ¼
102	74 ½	Agilent1Tch w					66	74 ½	66 7/8	66 7/8	“7 5/8
46 3/8	23	AirProduct	APD	.76f	2.1	25	7482	36 5/16	34 11/16	36	+1
12 3/8	8 3/16	AlamaoGp	ALG	.24	1.9	17	97	12 ½	12	12 3/8	+1/8
46 5/8	25 ¼	AlaskaAir	ALK			7	1019	29	28 5/8	28 5/8	“7/16

Next , notice that AMR is followed by Abercrombie (Abercrombie and Fitch) further down the page. This is because the stocks are listed in alphabetical order by the correct name of the company, not alphabetically by the strange shorthand for names. Since AMR is an acronym, (it's not really, read the preceding sidebar) it would precede a complete word. AT&T, which is a little further down the list, is also listed as an acronym rather than as American Telephone and Telegraph and therefore also precedes Abercrombie and Fitch.

You must also be aware that sometimes because of the way a corporation is structured, more than one listing will appear and the listings can be almost identical. In the example, AT&T is followed by AT&T Wrls, which stands for AT&T Wireless, an independent company. So, pay close attention.

And finally, if you look at the listing for ABN Am, you will notice that the name appears twice and the names are, in fact, identical. Notice, however, that each of the two listings is followed by "pfA" or "pfB," respectively. ABN Am (ABN Amro) is one company, but it is listed twice to display the information for both class A and class B of its preferred stock. (Do you remember the various classes of preferred stock from Lesson 5, "The Five Types of Stock"?) A "wt" could also follow, in which case the information would not be about the stock but rather about its warrants .

With all this information to think about, the first time you look up a particular stock, you may have to scan a moment or two to find it. This bit of searching is good, since it gives you the opportunity to become more familiar with the listings. Once you know what your stock listing looks like, you can aim right for it.

Stock Symbols

In the fourth column from the left is the stock symbol. This is the identifier that was initially used on ticker tapes and is still used today. The stock symbol is assigned to each stock by the market in which it is trading. It consists of a combination of one to four capital letters, depending on the market. The New York Stock Exchange and the American Stock Exchange both use one to three letters , for example, while the NASDAQ uses four.

Plain English

Depending on the market where stocks trade, stock symbols are composed of letter combinations of one to four letters. The NYSE can use one letter (Y for Algheny) to three (BDK for Black & Decker) while shares available through NASDAQ use up to four letters (Intel is known as INTC).

Often, electronic media will use the stock's symbol rather than its name to look up quotes. In addition, the stock symbol serves as a backup identifier for your stock in cases where several names or other information might confuse you.

Think of the stock symbol as an airport code. When you fly to Chicago, for example, your luggage tags read ORD for O'Hare Air-port. If you're not flying to Chicago, you probably wouldn't make the effort to learn that particular code, but if you are going there, you should know O'Hare's code. The same applies to stock codes. Don't attempt to memorize every one, just the ones you have purchased, are considering for purchase, or in which you otherwise have an interest.

TIP

The stock symbol is used so frequently in the financial world that it is a good idea to memorize the symbol for your stock.

High-Low

In the preceding table, the first column on the far left and the second column from the left show the stock's highest and lowest points, respectively, over the previous year. These are listed in dollars and cents. You will notice that most of the numbers are followed by fractions in denominations of 16. The fractions represent cents (16/16 = 100 cents , or $1), and the various equivalencies are given in the following table:

Fraction	Value in Cents
1/16	6 ¼
2/16	12 ½
3/16	18 ¼
4/16	25
8/16	50
9/16	56 ¼
10/16	62 ½
11/16	68 ¾
12/16	75
13/16	81 ¼
14/16	87 ½
15/16	93 ¾
16/16	100

Plain English

The 52-week high-low comprises two separate entries in the daily stock table, one that lists the highest point and the other the lowest point (respectively) at which the stock was trading during the course of the past year.

Although the high-low information represents dollars and cents, you might want to consider changing the dollars and cents into percentages to better portray the volatility of the stock. This is easily done by determining the dollar amount of the change.

Let's use Abercrombie and Fitch as an example. The highest level the stock rose to over the last 52 weeks was 49 11/16. The lowest the stock declined to was 8 7/8. You would subtract the low, 8 7/8, from the high, 49 11/16, and get 41 3/16, or 41.18. Divide this number by the 52-week high (in this case 49 11/16, or 49.68), and you will get the change in stock price in percentages. In this example, you would discover that the price of Abercrombie and Fitch varied a total of 82 percent over the last 52 weeks. That's a really volatile price.

Well it would be, but there's a catch. Do you see the little "s" before the first column? This is a qualifier that tells the reader that the stock split sometime in the last 52 weeks. A stock split is nothing more than a company recounting the number of shares of stock it has issued on the market, and dividing the number by (usually) half or reissuing two shares as three.

For example, if you owned one share of Abercrombie and Fitch, and it was worth $49, after the split you would own two shares, each worth $24.50. Or, in the case of a two to three split if you owned two shares at $49 each you would now own three shares worth $32.66 each. Companies make stock splits for many reasons, one of the largest being to keep the price of their stock low enough to attract investors.

Under normal circumstances, you would need to do a little more research to discover how the stock had been split, but for our example we will assume it was by half. This would change our high to 24.84 (49.68 · 2) and the stock's real volatility to 35 percent. That's a lot easier to believe.

Plain English

Qualifiers include symbols and initials in the stock tables that demonstrate under which circumstances the corresponding stock information should be considered. They are explained in detail in the stock key.

Other qualifiers run next to the 52-week highs and lows, and their presence can make a substantial difference in how the information is read. For example, when the stock has reached a price that is either higher or lower than anything in the past 52 weeks, it is designated as a new high or low with a small arrow pointing in the appropriate direction (up or down). When the stock is new, having been introduced within the last 52 weeks, it will be designated with a small "n" next to the first column. When looking up your stock, it is important to know what every symbol means. Fortunately, virtually all newspapers that run stock tables also run keys on how to read them. (Of course, you could always use this book, too!)

Dividends per Share

The column to the right of the stock symbol, Dividends per Share, lists the anticipated annual dividends for the year. This figure is given in the same dollars and cents format as used in the High and Low listings. Although dividends are usually paid quarterly, all four payments have been combined here to give the annual payment.

Plain English

Based on the amount of the last dividend paid, the entry in the Dividends per Share column provides an estimate of the anticipated dividend payments for a full year.

Most stock dividends are paid quarterly (once every three months), but this is neither a rule nor always true. Some companies pay dividends twice or thrice a year, and some not at all. This is another example of the type of information you will need to know before you can fully utilize the information in the stock tables.

It is also important to note that the dividend figure is not an actual figure, but an anticipated dividend payment based on the last quarter or regular declaration. "Anticipated" means that the number in the Dividend per Share column is what the company thinks it is going to pay out over the next year. As with the projected P/E ratio discussed in Lesson 12, "Evaluating Stocks," the company uses the amount of the last dividend payment as a guideline to keep things reasonable. That way, a company can't project that it will pay $10 in dividends next quarter if last quarter it paid only $1.

Using the preceding information, we can look at AT&T's listing on our example. The Dividend per Share column lists .88 as the projected dividend payment for the year. For the purposes of our example, we will assume we know that AT&T pays its dividends quarterly (they do in real life, too, by the way). By dividing .88 by the four dividend payments (the one that has already happened and the three that are still outstanding for the year), it is safe to assume that AT&T paid out about .22 per share in dividends last quarter and presumes it will do the same in the next three projected quarters . It's true that the dividend payments could have been projected as 22 + 20 + 22 + 24; however, this particular measurement of a stock's dividend health assumes that the issue of importance is the total annual dividend payment.

Notice in the example that the space in the Dividend per Share column is blank next to Abercrombie and Fitch. That is because not all stocks pay dividends. It would be a pretty safe bet in this example to assume that Abercrombie and Fitch is a growth-oriented company that is reinvesting all its profits back into the company rather than paying them out to shareholders. That makes Abercrombie and Fitch stock a growth stock.

Yield Percent

The column to the right of the Dividends per Share column is the Yield Percent (or Per Cent Yield) column. The figure within this column indicates the stock's value in relation to its current price and annual dividends ”or the percentage of return based on the stock's closing price. The Yield Percent is calculated by dividing the dividend amount in the Dividends per Share column by the amount in the Close column (second column from the right).

Plain English

The Yield Percent provides the ratio of dividends paid by a stock to its closing price. With this figure, investors can calculate the amount of income generated by the stock relevant to its initial investment requirement.

Please notice that the information in the Yield Percent column could be easily calculated by using information contained elsewhere in the table. The fact that a table, which is already so crowded, should make room for the calculation of an equation for its users is an indication of both the importance and the popularity of the Yield Percent figure. The information contained in this figure differs from the Current/ Dividend Yield discussed in Lesson 12 primarily in its usage. As a result of the stock being actively in play from the investor's perspective, this figure provides not only a more current and fluid view of the stock's value, but the opportunity to distinguish and spot trends and evaluate the stock's performance as well.

While a stock's Current/Dividend Yield is but one figure, changes in the performance of the Yield Percent provide daily figures that can be charted or compared at regular intervals. This information can then be used against the initial amount projected by the company for the year's dividends. That information can enable the investor to adjust future projections by the company to calculate a more reasonable, and often a more accurate, projection.

CAUTION

Always compare how well the stock really did with what the issuing company said it would do. If the company continually aims high and falls short, future quotes are probably inflated. Should the company's quotes continually prove overly conservative, you would also adjust accordingly .

It is important to reemphasize that the Yield Percent is dependent on the decisions of the management of the stock's issuing company. The company can choose to pay dividends at whatever amount it sees fit. Or, the company can choose not to pay dividends at all. The absence of dividends would be indicated by an ellipsis ( ), as noted next to AT&T Wrls in the example.

The Yield Percent listing's popularity is also due in large part to its easy-to-understand portrayal of the stock as a business. Again, this differs from the Current/Dividend Yield in that instead of having one figure, time provides a number of daily figures illustrating the stock's performance over time figures.

To illustrate , imagine buying a business such as a clothing shop. The Current/Dividend Yield figure would represent the price that you, the investor, paid for the business (stock), while the Yield Percent would represent the amount of money (dividends) made by the shop after changing hands. Like a clothing store owner, a stock owner also questions the rate of return on his or her investments. The Yield Percent provides a one-figure answer.

As with anything so easy, there is a catch. That one-figure answer is totally dependent on the company's decision on what, if any, portion of its earnings will be paid out to its investors. The Yield Percent is therefore not as much an indicator of how the company is doing as it is an indicator of how the company is being managed ”the portrayal of the company that its management wants you, the investor, to see.

P.E. Ratio

To the right of the Yield Percent column is the Price/Earnings ratio, or P.E. ratio. Even though the name is the same as the Price Earnings ratios (Trailing, Standard, and Forward) discussed in Lesson 12, the figure listed here is not calculated using the stock's dividend payments. Instead, by dividing the P.E. ratio into the stock's current price, the investor can discover the stock's dollar earnings per share.

Plain English

The P.E. ratio in the stock tables is calculated by dividing the issuing company's total earnings by the number of outstanding shares. This way, investors can analyze the actual money generated by their investment without the confusing factors associated with dividend payments.

The P.E. ratio is useful in that it doesn't portray the value of the stock as compared to its selling price but rather as compared to how much the stock is earning . Or, in other words, the price of one share of stock as compared to the earnings of the company.

Think of it this way: Using the same clothing store example, let's assume that three different clothing stores exist in town. One clothing store owner pays all profits to his or her investors, the second reinvests all profits back into the business, and the third reinvests some of the profits back into the store and pays some out to the investors. To make things more confusing, each store has a different number of investors. It would be difficult to determine which store was actually doing the best business simply by using only their dividend payments.

However, if we could determine the total amount each store had made in profits, we could then divide this number by the number of inves-tors. The resulting figure would provide a much clearer view of the amount of return each store was generating on each dollar invested, regardless of where those returns were going or how many people were involved.

Similarly, investors use the P.E. ratio to determine the relative value, or what kind of return their investment provides. This is often referred to as "trading at X times the company's earnings," or simply " X times earnings." For example, in the sample stock table, notice that Abbot-Lab's P.E. ratio is 26 times earnings. This means that the current price of AbbotLab's stock, $41.38, is 26 times more than the company's earnings per share of $1.59 for the last year. Or, in other words, if Abbot Labs continued to earn the same amount of profits each year and the company never changed (an absolute impossibility ), in 26 years its stock would pay for itself.

Stocks trading at more than 20 times earnings are considered to have "high" P.E. ratios, and stocks trading at less than 10 times earnings are considered to have "low" P.E. ratios. More important, the same warning given earlier about rules being quickly dismissed in the realities of stock trading also applies to P.E. ratios. Remember that the P.E. ratio of a stock is useful only when it is used within the total context of the stock, including such factors as industry, past performance, and current market conditions.

Vol 100s

The figure in the column to the right of the P.E. Ratio column is the Vol 100s listing, and it contains the number of shares of the stock that traded on that particular day. This number is rounded off to the nearest thousand, so two additional zeros need to be added to the listed figure.

Plain English

The Vol 100s listing contains the number of total shares of each stock that changed hands during the trading day. When the figure in this column is under 10,000, it must be multiplied by 100 to obtain the correct number of traded shares.

Many people explain this figure as representing the number of round lots of shares that have been sold. However, not all stocks sell in lots of 100, so this explanation is not consistent with the listed figures. I use the explanation that there simply isn't enough room to list the entire number and that the most insignificant digits of the figure are truncated ”the figure is rounded off to fit.

Either way, what is certain is that the volume of shares being traded is a good indicator of whether a stock is being actively traded or virtually ignored. The other measurements have concerned themselves predominantly with the condition of the stock and its issuing company. The volume of stock traded, however, measures the supply and demand of the stock in the market. This information can be interpreted any number of ways, depending on the circumstances. However, when a stock is trading at unusually high levels, the high volume is often an indication of extreme volatility in either the price of the individual stock or the market as a whole.

To determine whether the number of shares actually traded that day represents a substantial portion, you would first need to know the total number of shares the company has issued. Obviously, what is considered substantial is arbitrary. Each investor would have a different idea of what constitutes substantial. The markets, rather than attempting to determine this, present the information and let the investors decide for themselves. They do, however, note the most actively traded stocks (the top 40 for the NYSE and the largest 20 for the AMEX) as a percentage of their average trading volumes . These are underlined for easy spotting.

This is not usually presented to indicate the preference of any market, but because stocks being heavily traded are usually reacting to a recent event or announcement that has changed the company's status quo. Stocks may be selling quite heavily in response to an interest rate hike, or they may be bought up in response to an analyst's prediction or rating. Whatever the reason, the stock's circumstances are changing, and the volume of shares traded will reflect the response to that change by the market as a whole.

High-Low

The next two columns to the right of the Vol 100s column list the highest price and the lowest price, respectively, that the stock reached during the trading day. Like the Vol 100s figure, the numbers in these columns do not measure any aspect of the stock from an internal point of view but rather measure how the stock is perceived in the market.

Plain English

The daily high-low entries list the highest and lowest points at which the stock was trading over the course of the day. Used together, you can use these figures to better understand the volatility of the stock. Remember that this is different from the high-low listing discussed earlier which shows the highest and lowest price of the stock over the last year.

During the stock trading day, investors will buy some stocks and sell others. As a very general rule, when more shares of the stock are being sold than purchased, the price of the stock will drop because of the laws of supply and demand. These same rules would cause the price of the stock to rise should more shares be purchased than sold. Interestingly enough, these peaks and valleys of the stock price create a self-fulfilling prophesy. As the stock crests at new heights and drops to new lows, these new levels will, in turn , cause investors to buy and sell the stock even more.

Although it is not possible to chart the entire trading day of each stock in these tables, the tables do provide the highest and lowest points the stock reached on its journey to the end of the day. Subtracting the lowest price of the day from the highest provides a figure known as the spread. The spread accurately measures the volatility of the price of the stock during the trading day. Like the volume of stock traded, the spread is completely dependent on the stock's perceived value in the market, rather than the value attributed to the stock by its issuing company. Perceived values will be what drives sales and purchases of the stock.

CAUTION

Since the perception of a stock's value is heavily influenced by events and announcements in the market, the spread is more of an indicator of the market's reaction to these events, rather than the condition of the company.

The perceived value can be thought of as the ultimate in self-fulfilling prophecies. A company that maintains a low perceived value could, in theory, eventually lose all its investors and go out of business as a result of this perception, regardless of the actual financial condition of the company. Perhaps it is more a case of what came first ”the bad perception or the subsequent bad financial health of the company that confirms the perception.

Close

The figure in the second column from the right is, hands down, the easiest of all the information in the table to read. No knowledge of abbreviations, background research, or mathematical computations is required. The figure in this column is the close, the price of the stock at the end of the closing day. The ease of understanding this figure is not, however, a reflection of its importance.

Plain English

The close is the stock's current price or the price at which the stock settled at the end of the trading day.

The closing price of the stock can be compared, for example, with the original price at which the stock was purchased in order to show any gains or losses from the original amount invested. Without requiring the use of mathematical equations, this method provides a very basic and completely accurate picture of an investment's performance.

The closing price can also be compared to the high and low prices in the previous two columns to discover where in the volatility of the trading day the price of the stock eventually settled. Using the AT&T Wrls stock in our sample stock table, for example, we can determine that the stock got as high as 27 13/16 before bottoming out at 26 ½. Unfortunately, in our example, that's also the price at which the stock closed for the day. Finally, remember that many of the equations used earlier require the use the stock's closing price.

Investors can crunch numbers relevant to this or compared to that in order to come up with a dizzying volume of statistical data that will reveal any aspect of a stock's performance or support any view. At the end of the day, however, the simple way to determine the success of any investment is simply to ask, "Is it more valuable now than when I first bought it?" Without any flourishes, the closing price of the stock will announce just that.

Net Change

The figure in the last column on the right shows the net change, the change in the closing price of the stock from the previous day's closing price. Comparing this information with the current day's closing price gives the most basic indicator of the behavior of the stock's price from day to day. In our sample table, we can see that the change in the price of AirProduct's stock from the previous day was +$1. Using the current day's closing price of 36, we can deduce that AirProduct's stock price yesterday at closing was $35 per share, or that the value of AirProduct's stock went up $1 today.

Plain English

The net change is an indicator of the difference between the stock's current day closing price and the stock's previous day closing price.

In addition, however, remembering that the previous day's closing price is the same price at which the stock began the trading day, we can compare that price to the stock's current day high and low to get an even better picture of the stock's volatility during the day.

For example, in the sample stock table, we can determine that AgilentTch started the trading day at 74 11/16. The stock closed at 66 4/8, which is only 5/8, or .50, higher than the lowest point the stock hit that day. In this case, adding the net change loss to the closing price of AgilentTch (66 5/8 + 7 5/16), we can determine that it started the trading day at 73 5/16. The stock rose only a little higher during the trading day to its highest point of 74 ½, or a little more than half a point, and then plunged to 66 5/8, which, as we have already determined, was very close to the lowest point the stock reached during the day. This information gives a clear picture that this was a really bad day for AgilentTch. Combined with the information in the rest of the table, we know that AgilentTch at some point within the last year was trading at $162 per share (in the 52-Week High column) and that it has also traded as low as 39 13/16. Although today's performance wasn't the worst one ever experienced by AgilentTch, it's still pretty bad.

TIP

Please remember that the net change information by itself doesn't provide the whole picture. It is, however, a definite indicator that anyone interested in investing in this stock needs to learn what the relevant information is before deciding whether this stock is a good investment.

I l @ ve RuBoard