Today I want to back up a little and take a closer look at one of the primary tools you'll use in researching companies whose stocks you are considering: the Yahoo! Finance company summary page. The image below is from today's Apple (AAPL) summary, which I chose because it is by far the largest company in the world by market cap and its stock is widely held.
This
is where most of your reading will begin. If you ultimately purchase stock in a
company you've researched here, you will also likely return for periodic
checkins. No other single spot on the web amalgamates more critical and
live-updating information regarding US public companies. The interface is
pretty dated as the site hasn't really had an update in over a decade, but it's
nonetheless easy to navigate.
I
described in a previous post how to get here-- just search for Yahoo! Finance,
then enter the company name you want in the Lookup box. Now I want to spend a
few minutes exploring this page and all it offers.
1: Headlines. As I also mentioned previously, the Headlines section is a hub of up-to-the-minute published news articles, essays, and analysis containing the company's name or ticker symbol. From a wide variety of general news and financial news and blog sources, Yahoo collects and lists a vast trove of documents for your convenience. Twitter and Facebook mentions do not show up here but legitimate published works generally do.
2: Key Statistics. Click here and you'll find all sorts of detailed financial data plucked from the company's most recent financial reports, like total enterprise value, annual revenue, profit and profit margin, earnings per share, EPS divided by growth rate (called PEG ratio), cash on hand per the most recent balance sheet, return on assets and return on equity (how much they make relative to the resources at their disposal), and current ratio (the company's ability to pay 12 months' worth of it's current debt with current cash flow). Much of this information can be found by digging through the company's financials themselves, and a little simple math. But this area provides simplified financial highlights.
3: Competitors. This is really more of a guideline comparison chart tool, often less about actual competitors than about companies occupying a similar space or role in the marketplace. For example if you look up Google (GOOGL) competitors, it will list Facebook (FB), which really is not a competitor to Google in a traditional sense, but certainly competes for "eyeballs" or consumer time spent online, and is likewise funded by advertisers. Again, the charts in Competitors will allow you to compare head-to-head a company's size (by dollars by number of employees), profits, price-to-earnings ratios, and other such straightforward metrics. It's always important to know what sort of field your company is playing on.4: Analyst Opinion. This is a very simple 5-point scale of desirability of ownership of the stock, an average of the Wall Street professional analysts who cover this company. 1.0 = Strong Buy (analysts generally recommend buying the stock at its current price), 3.0 = Hold (don't buy or sell, but stay tuned), 5.0 = Strong Sell (recommend selling at the current price). This particular tool is generally oversimplified for my taste but useful if you want a quick-and-dirty glance at what the pros are thinking about a company's value at the moment.
5: Major Holders and Insider Transactions. This area is extremely useful if you want to know what individuals and institutions hold big chunks of the stock of this company, which I always do. These folks have outsize influence on company decisions and directions, so knowing a little about who they are can be very helpful in figuring out what sort of company it is and what will likely happen in the future.For example, if we open Major Holders for Apple Inc, we find first that Arthur Levinson, Chariman of the company, holds the most Apple stock of any individual. Second place is Tim Cook, CEO. This is good news, we want companies whose executives hold a lot of shares-- they are far more likely to act in our best interests as shareholders if their actions affect their own portfolios!
We can also click on Insider Transactions and see whether the largest shareholders have been buying or selling shares lately. This can be a great place to discover trends which could be a cause for excitement or concern. For example if you learned that several key executives have been selling a great number of shares, it could be a sign that those managing the company have lost faith in the business. Likewise, if executives are buying up shares for their personal holdings, it's generally a sign that they believe the current price is too low, and they are expecting great things for the stock. Who would know better than they what's coming?
6: Balance Sheet, Income Statement, Cash Flow Statement. As I've indicated, this is the location of all the public record financial statements the company reports quarterly and annually to comply with public company regulations. I will not spend significant time here going into what you can learn from these documents (that's another post) but you can certainly have a look and very quickly deduce trends: are revenues going up year over year? Is R&D spending going down? Is debt increasing or decreasing? We'll tackle more substantial analysis of these later.
7: Charts. This section is just fun to play with. Click on any of the time periods below the chart on the summary page and you'll get a new, large, customizable chart of the stock's rises and falls. You can see the stock price on any day going back years, redraw the chart a dozen different ways, compare charts of different companies or against the S&P 500 index, examine different time periods and so on.