How to Read a Stock Quote

by | Oct 19, 2022 | Research

It can be a challenge to determine whether a stock is a worthwhile investment. This process usually entails reviewing the financial position of the company and using common metrics to compare the company’s earnings and stock price to others in a similar industry. These activities can be time consuming, so most investors begin their research with a stock quote.

A stock quote will give you an overview of the stock you are researching, including the current price of the stock and some general performance information. If you know how to read a stock quote effectively, you can make more informed investing decisions.

Common Components of a Stock Quote

There are many online and offline sources where you can find stock quotes. You could use Yahoo Finance, index providers like S&P Global and Nasdaq, newspapers like the Wall Street Journal, television channels like CNBC, or you can just type a company name into Google. Regardless of where you get your stock quote, they typically contain the following information:

Sample Stock Quote

Sample stock quote taken from Google Finance.

  1. Company Name – The most important piece of information in the stock quote is the company name.
  2. Exchange – Near the company name, you should find the exchange on which the stock trades. Stock exchanges are markets that connect buyers with sellers to facilitate trades like the New York Stock Exchange [NYSE] and the NASDAQ.
  3. Ticker Symbol – In addition to the company name and exchange, a stock quote should include the ticker symbol. This is an abbreviation, typically between 1 and 5 characters, used to identify the stock. The ticker symbol can help you differentiate between share classes if a company has more than one class of stock. For example, GOOG is the ticker symbol for Alphabet Inc. (Google) Class C stock, while GOOGL is the ticker symbol for the Class A shares of the same company.
  4. Current Price – The current price of the stock is typically shown in large letters beneath the stock’s identifying information. Beside it, you may find the price change in parentheses ­– this figure usually reflects the difference in the current price compared to the price at the most recent close of trading. This will usually be displayed in red if the stock is trading lower and in green if it is trading higher.
  5. Price Chart – Stock quotes typically include a graph depicting price changes throughout the day. This chart can help you quickly understand the direction the stock price has been moving and project where it might go next. Many analysts focus on reading stock price charts – a.k.a. technical analysis – to predict the future prices.
  6. Opening price – The price of the first trade of the day. This is sometimes abbreviated to “open.”
  7. Intraday High and Low Prices – You may see “high” and “low” in a stock quote. These most often refer to the highest and lowest price of the stock during the trading day. Intraday high and low prices can help you determine the current volatility of the stock. If there is a large difference between the high and low, there may be opportunities to take advantage of short-term fluctuations. High volatility could also indicate a risky investment.
  8. 52-week High and Low – Stock quotes typically include the 52-week high and low prices of the stock. These numbers represent the highest and lowest sale prices for the stock in the past 52-week (1 year) period. Similar to intraday high and low prices, the annual range can also help you determine the volatility of a stock’s price, but over a longer horizon. A large spread between the high and low can indicate a risky stock, a stock that has gained significant value in the past year, or a stock that has lost significant value in the past year. That’s why it’s important to pair this data with an annual stock chart to understand when and why the prices fluctuated.
  9. Market Capitalization – Market Capitalization [mkt cap] often referred to in conversation as “market cap” is a measure of the size of the company based on the number of shares outstanding and the current share price. Market cap is calculated by multiplying the number of shares outstanding for a particular company times the price of the stock.
  10. P/E Ratio – The Price-to-Earnings ratio is another common component of a stock quote. This ratio can help you determine if a stock is overvalued or undervalued by comparing the current price to the company’s earnings per share.
  11. Dividend Yield – The dividend yield [div yield] – shows the amount stock owners received, per share, in dividends for owning the stock in the past year expressed as a percentage of the stock price. For example, a $100 stock that paid $5 in dividends in the past year would have a 5% dividend yield. This measure can be particularly beneficial if you are seeking income from your stock investments.
  12. Climate Change Information – Some stock quotes include a climate change score. For example, Google includes the CDP score in its stock quotes. If you are interested in Environmental, Social, and Governance investing, this information could be valuable to you.

How to Use a Stock Quote

A stock quote can provide valuable information to help you make informed determinations about a stock’s performance and volatility. How you use this information will vary depending on your goals. For frequent traders, stock quotes can help determine the optimal time to place trades or to decide if there is the opportunity to capitalize on short-term volatility. For longer-term investors, stock quotes can help you stay up to date on your current holdings and investigate any companies you may be interested in adding to your portfolio.

While stock quotes can provide some quick insights, there is much more to choosing advantageous investments than what can be seen in a quote. Financial advisors who specialize in stock trading often review a company’s financial statements, changes in the overall economy, predictions for the future of each industry, and forecasts for the markets as a whole before making trades. This detailed research is very time consuming, so many investors choose to leave it to the professionals. If you are interested in stock investing and want input into the companies included in your portfolio, contact an advisor who can create a custom portfolio.

Partner with DreamWork to Find Opportunities in the Stock Market

Investing Gameplan™ by DreamWork Financial Group, is an innovative wealth management program offering custom portfolios comprised of individual stocks and low-cost ETFs. This program is designed and implemented by fiduciary advisors. This level of portfolio customization is typically reserved for the very rich, but with Investing Gameplan™ You Don’t Have to Be Wealthy to Have Wealth Management®.

At DreamWork, your portfolio manager is your advisor, so you have a personal relationship with the person choosing your investments. We seek to create a financial partnership with our clients and incorporate your ideas and preferences into your portfolio.

Contact us today to get started.

Article Topics: Stocks