Alternative Investment Market (AIM) – A ‘junior’ market compared with the main London Stock Exchange with less onerous listing requirements - it tends to attract smaller companies that have been trading for a short period of time.
Acquisition – the act of a company or other entity acquiring control of a corporation, either by stock purchase or exchange.
AGM - A mandatory yearly meeting of shareholders that enables stakeholders to remain informed and involved with company decisions and workings.
Balance Sheet – A financial statement which provides a quantitative summary of a company’s financial position at a given point in time.
Bid Price – The price at which a market maker will buy a security.
Broker Recommendation – A stockbroker’s opinion of the investment quality of a company’s shares. These recommendations are not necessarily complementary to your specific circumstances. Stocktrade cannot provide you with advice and if you have any doubts about the suitability of an investment you should contact a financial adviser.
Bulletin Board – An area of a website where private investors can post comments and questions.
Called up Share Capital – Nominal value of shares of a company that are issued and fully paid.
Capital Employed – Capital employed is the value of the assets that contribute to a company's ability to generate revenue – it is calculated as fixed assets plus current assets minus current liabilities.
Cash Flow – A measure of a company's financial health – it is calculated as cash receipts minus cash payments over a given period of time.
Cash Flow Statement – Gives a summary of a company’s cash flow over a given period of time.
Closing Price - The price of the last transaction for a given security at the end of a given trading session. Also called the close.
Corporation Tax – A tax paid by limited companies on their profits.
Creditors – Individuals or entities to whom a company owes something, usually cash or a claim to services.
Debtors – Individuals or entities who owe the company something, usually cash or a claim to services.
Director Dealings – the purchase or sale by directors of their company’s shares.
Disposals – the sale of a business or business line to another entity.
Dividends – A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly.
Dividend Cover – A company’s ability to pay ordinary dividends to shareholders out of profits earned - it is calculated by dividing the adjusted Earnings Per Share (EPS) by the total dividend per share.
Dividend Growth (Average) - this measures the company’s track record of growing dividend payments over a given period.
Dividend Payment Date – The date on which a dividend will be paid to shareholders.
Dividend Per Share Growth – The percentage change from the previous year in the dividend paid on each share.
Dividend Yield - A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. The Dividend Yield is calculated as:
(Total Dividend/ Share Price) x 100
Dividend Yield is displayed as a percentage.
Earnings Per Share – A company’s profitability expressed on a per share basis and calculated by dividing the company’s annual earnings after tax by the number of shares in issue.
EGM – If something happens within the company that requires the shareholders to meet before the next scheduled AGM, then an Extraordinary General Meeting (EGM) is held.
EPS Growth - EPS growth shows the relative growth of a company’s earnings over the last year. A negative value indicates the company’s earnings fell in the last year. It is calculated as:
[(Current year EPS – Last year EPS)/Last year EPS] x 100.
EPS Growth is displayed as a percentage.
Exchange Traded Funds (ETFs) – ETFs are much like conventional tracker funds, pooling the investments of a large number of individuals and investing it in a basket of shares in companies that replicate a given market index. ETFs are ‘open ended’ but do not usually have initial charges while their annual management charges tend to be relatively low.
Ex-Dividend Date – If an investor does not own a stock before the ex-dividend date, he or she will be ineligible for the dividend payout. For all pending transactions that have not been completed by the ex-dividend date, the exchanges automatically reduce the price of the stock by the amount of the dividend.
Forecast Dividend Change – This is what analysts forecast a company’s dividend payout will increase/decrease by over a given period.
Forecast EPS Change – This is what analysts forecast a company’s EPS will increase/decrease by over a given period.
Forecast Revenue Change – This is what analysts forecast a company’s revenue will increase/decrease by over a chosen period.
Gearing – Companies are financed by a combination of debt and shareholders’ equity. A gearing ratio will indicate how much a company has borrowed in relation to the amount of shareholders’ funds in the business.
General Meetings – A meeting of the shareholders of a company (usually held on an annual basis) commonly known as an AGM at which business such as the reception of the directors’ report and accounts, declaration of dividends, election of directors is conducted.
Gross Gearing – Calculated by dividing gross borrowings by shareholders’ funds.
High/Low price – The highest and lowest prices for a security over a certain period – usually quoted for the day (intraday high/low) and for the year (52 week high/low).
Index – An index is a statistical indicator representing the value of its constituent securities. Indices are often used to measure a market or industry’s performance. An index may be grouped by market capitalisation (e.g. FTSE 100), business type (e.g. the technology companies in the FTSE Techmark index), sector (e.g. Telecoms) or other criteria.
Intangible Assets – A company’s long-term assets that are usually non-physical in nature, but represent a right or expected future benefit. Examples are goodwill, brands and trademarks.
Interest – Monies charged by a bank or other financial organisation for lending money. This can also refer to the return earned on an investment, including money on deposit at a bank.
Interim Dividend - A dividend which is declared and distributed before the company's annual earnings have been calculated. These dividends are usually distributed six-monthly or quarterly.
Interim Results (“Interims”) - The results reported by a company for the first six months of its financial year. Generally, interim results are made public within three months of the end of the interim period.
Introduction - When a company comes to the market without making any money on admission.
IPO – Initial Public Offering, the term used for a company being floated on the stockmarket.
Investment Trusts – a collective fund in the form of a listed company holding a portfolio of securities on behalf of its shareholders. An investment trust and its shares are tradeable in the same way as other companies and shares.
ISIN - International Securities Identification Number. A unique international code which identifies a securities issue. Each country has a national numbering agency which assigns ISIN numbers for securities in that country.
Market Capitalisation – The market value of a company, calculated by multiplying the current share price by the number of shares in issue.
Mid Price – The price in between the Bid and Offer price.
Net Assets – The total figure for all assets less all liabilities.
New Issue – Also known as IPO or Initial Public Offering, the term used for any company joining the stockmarket.
Offer Price – The price at which a market maker will sell a security.
Official List – The UK Listing Authority’s list of all listed securities.
Operating Margin – This is the trading margin for each period reported, showing trading profit as a percentage of sales, or total trading revenues.
The calculation is as follows:
Trading profit/total sales x 100 = margin (%)
Operating Profit/Loss – A company’s profit after deducting operating costs from gross profits.
P/E Ratio - Also known as the Price to Earnings ratio. It the most common measure of a stock’s valuation. The P/E ratio is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period. The value is the same whether the calculation is done for the whole company or on a per-share basis. For example, the P/E ratio of company A with a share price of £10 and earnings per share of £2 is 5. The higher the P/E ratio, the more the market is willing to pay for each pound of annual earnings.
Stocktrade uses the adjusted EPS figure for this calculation.
PEG Ratio – This is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected future growth - a stock's price/earnings ratio divided by its year-over-year earnings growth rate. In general, the lower the PEG, the better the value, because the investor would be paying less for each unit of earnings growth.
The PEG is calculated as P/E Ratio/EPS Growth and is expressed as a number.
Placing - A form of issue of securities in the UK, typically with a predetermined number of non-retail investors.
Portfolio – A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are collective investments that pool money from many investors and are managed by professionals.
Preference Shares - Fixed dividend shares that rank above ordinary shares if a company is wound up. Preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders.
Preliminary Results – Listed companies have to announce the annual financial results for the company, also known as prelims or finals. They are considered preliminary until they are reviewed, adjusted and approved by audit. Companies also have to announce interim results and some companies announce quarterly figures.
Pre-Tax Profit – A company’s operating profit before tax is deducted.
Pre-Tax Profit per share – A company’s profit after expenses but before tax divided by the number of shares in issue.
Profit and Loss account - The profit and loss account provides a record of a firm's trading activities and whether it has made a profit or lost money over a particular period of time. It differs from the balance sheet that records the financial position of the business at a particular moment in time.
Profit Growth (Average) – This shows how strongly a company is growing by comparing the net profits to the past net profits over a chosen period.
Profit Warning – When a listed company expects profits to fall below analysts’ forecasts by more then 10%, the directors are required to issue a profits warning through the London Stock Exchange.
Public Offer –This is when a new securities issue is made available to the public through an underwriter, also called an offering. The public can ask for a prospectus and apply to buy shares.
Reserves – In asset-based lending, this is the difference between the value of the collateral and the amount lent. It also refers to the funds set aside for emergencies or other future needs. Reserves can arise from the retention of profits or from events such as the issue of shares at a premium or the revaluation of assets.
Regulatory News Service – Also known as RNS, a means by which UK listed companies make announcements to the London Stock Exchange.
Revenue Growth (Average) – This shows how well a company is growing by comparing the revenue over a given period to historical revenue.
ROCE – (Return on capital employed). This is a measure of the return from invested and borrowed capital. The return is the pre-tax profit earned before charging borrowing costs.
Sales Per Share – A ratio that shows the total revenue earned per share over a 12-month period. This ratio can be compared to the company’s share price to understand the value that the markets are putting on a unit of the company’s sales.
Sectors – A distinct subset of a market, industry, or economy, whose components share similar characteristics. Stocks are often grouped into different sectors depending upon the company's business.
SEDOL - The Stock Exchange Daily Official List number - a code used by the London Stock Exchange to identify stocks, especially those that are not actively traded in the US and don't have a CUSIP number.
Shares – A unit of ownership that is a proportional amount of a company. The standard class of shares are usually referred to as “Ordinary Shares” but a company may have more than one class of share, including Preference Shares.
Share Premium Account – Surplus of proceeds from share issue over the nominal value of shares issued.
Shareholder Funds – The sum of all company assets less all liabilities.
Shares in Issue - This is the number of shares currently issued for that company.
Spread – The difference between the Bid Price and the Offer Price of an investment.
Stock Exchange – This is an organization of brokers and investment bankers which has the purpose of providing the facilities for the trading of company shares and other financial instruments - usually a central location and recordkeeping. The trading of shares on stock exchanges is called the stock market.
Stocks – The combined value of raw materials, work in progress or under construction and finished goods held.
Note that this is also the US term for ‘shares’.
Tangible Assets – Physical assets owned by a company or individual such as buildings, goods for sale or machinery.
Time and Sales - The official record of trades executed on a stock exchange during the day.
Ticker - The three or four letter trading symbol assigned to the share (and some types of fund – investment trusts and ETFs) by the exchange on which it trades. Investors often refer to shares by their ticker symbols because of their brevity and as they often remain the same even if a company’s name changes.
Total Assets – The sum of all company assets; both fixed and current.
Trading Statement – A statement made by a company regarding current business activities and sales.
Turnover – Also known as sales, the amount derived from the provision of goods and services falling within a company’s normal activities after the deduction of factors such as trade discounts and VAT.
Volume – The number of shares traded over a given time period, usually one day.
VWAP (Volume weighted average price) - A measure of the price at which the majority of a given day's trading in a given security took place. This is calculated by dividing the value of trades executed by the volume of shares traded over a given period.
Stocktrade is a division of Alliance Trust Savings Limited, which is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number: 116115. Alliance Trust Savings gives no financial or investment advice. Calls may be recorded for training and security purposes.