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Equities & Finance Glossary – Terms Starting with E
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Terms Starting with E
Earnings Announcement The date on which a quarterly earnings announcement was made by a company.
Earnings Announcement, Days Since Companies are required to announce their earnings every quarter. Using Earnings Announcement, Days Since, you can find companies that announced earnings in the last day, seven days, or month.
Investors compare earnings in the earnings announcement to what they projected the company might earn. Large discrepancies usually prompt large swings in the company's stock and create headlines in the business press, because the market often overreacts to both good news and bad news. The news is usually the earnings announcement. By searching for companies that just announced earnings, you can find companies you believe the market has punished too heavily.
Earnings Announcement, Days Until Use Earnings Announcement, Days Until to find companies that are expected to announce their earnings in the next day, week, or month.
If the company's earnings come in below the market's expectation (i.e., a Negative Earnings Surprise), the price usually goes down. If the company earns more than was expected (i.e., a Positive Earnings Surprise), the stock price usually goes up.
Use Earnings Announcement, Days Until to find companies you believe are undervalued, and for which an impending earnings announcement may cause the market to make an upward adjustment.
Earnings Before Interest, Taxes, and Depreciation (EBITD) Earnings Before Interest, Taxes, and Depreciation measures how profitable companies are relative to each other. Interest and taxes are excluded from the calculation, because interest measures how much leverage a company has, not how profitable the company is. Similarly, taxes are more of a measure of what the last couple of years were like, rather than what the current year is like.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Earnings before interest, taxes, depreciation, and amortization. Also known as operating cash flow. EBITDA is calculated by subtracting cost of sales and operating expenses from revenues. It is a useful measure of cash flow for companies that have low earnings because of large restructuring, capital build-out, or acquisition costs.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin Earnings before interest and taxes, divided by revenue. This is a measure of a company's earning power from ongoing operation for a given period of time. Time periods include Trailing Twelve Months (TTM).
Earnings Per Share (EPS) The net income available for the common stock, divided by the number of outstanding shares.
Earnings Per Share (EPS) Growth Earnings per share (EPS) growth can be analyzed as actual historical data or as estimated growth based on analyst projections.
Actual historical comparisons include:
Last 5 Years Annualized growth rate of earnings per share over the last five years. Last Quarter vs. Same Quarter Prior Year Compares actual results from the most recent quarter with the same quarter a year earlier. Even though this growth rate is calculated on a quarterly number, by going year-over-year, the growth rate is comparable to an annual growth rate. By targeting the same quarter in two different years, quarter-to-quarter seasonality problems are eliminated. Trailing Twelve Months (TTM) vs. Prior Trailing Twelve Months (TTM) Compares the most recent Trailing Twelve Months of earnings growth (last four quarters) with the same four quarters from the previous year. Trailing Twelve Month numbers represent the most recent full-year picture of earnings using actual numbers (as opposed to estimates). Projection comparisons include:
Next 5 Years Analysts are asked to estimate annualized EPS growth rates for the next five years for every company they follow. This value is the consensus of those estimates. This criterion is a highly subjective estimate of company growth over the next five years, and may be used to check valuation using a PEG ratio, or to determine whether the market's forecasts are reasonable. Current Quarter Next Quarter Compares the consensus earnings estimate for the current year with the estimate for the following year. This criterion estimates how quickly the company may grow from this year to the next. Projected This Quarter vs. Same Quarter Prior Year Compares the current quarter's projection with the actual from the same quarter a year earlier. This criterion presents a real year-over-year growth number, and is a good indicator of the company's current annual growth rate. Current Yr Next Yr Compares the consensus earnings estimate for the current year with the estimate for the following year. This criterion estimates how quickly the company may grow from this year to next.
Earnings Yield (EPS/Price Per Share) Earnings Yield is a percentage calculated by dividing Earnings Per Share for the most recent 12 months by current price per share. For example, if a company earned $1.00 a share for the most recent 12 months, and its price is $10, its earnings yield is 10%.
If a company does not grow (or shrink), Earnings Yield is the return you will get on the company's current earnings. Therefore, a higher Earnings Yield is usually better. In searches, Earnings Yield corrects some of the big disadvantages of Price/Earnings Ratio using exactly the same numbers. For example, if a company has a price of $100.00 and earnings of $.01, it would have a P/E of 10,000. In this example, the P/E is high because the earnings are low, not because the price is high.
Use Earnings Yield to find stocks that might be undervalued (i.e., Earnings Yield relative to their peers is high).
Emerging Market A securities market of smaller size, or short operating history (e.g., Greece, Russia, China, and Brazil).
Employees The number of company workers as reported to shareholders. This is reported by some firms as an average number of employees and by some firms as the number of employees at year-end. No attempt has been made to differentiate between these forms of reporting. If both are given, the year-end figure is used. The number of employees is represented in thousands of employees on an annual basis.
Employees includes:
All part-time and seasonal employees All employees of consolidated subsidiaries, both domestic and foreign Employees excludes:
Consultants Contract workers Employees of unconsolidated subsidiaries For banks, this item always represents the number of year-end employees.
Est. Analyst Coverage The number of analysts expected to submit earnings estimates. Time periods measured include:
This year Next year
Est. Analyst Coverage is an indicator of how closely a company is watched. The more closely watched a company is, the less likely it is that there will be positive or negative surprises that could cause large changes in value. However, the less closely watched a company is, the more likely you are to find value that others have not yet found. .
Exchange The exchange on which a security is traded. Generally, the exchange a stock trades on does not matter, with one exception: stocks that do not meet the listing criteria of the major exchanges (the AMEX, NASDAQ, or the NYSE) are listed on the non-NASDAQ or bulletin board. Stocks fail to meet the listing criteria due to lack of financial strength, lack of liquidity, or failure to file reports of their quarterly results properly. To eliminate these companies from your search, select All Except Bulletin Board.
AMEX The American Stock Exchange. The AMEX is the second-largest stock exchange in the U.S., after the New York Stock Exchange (NYSE). Since its listing rules are a little more lenient than the NYSE's, the AMEX has a larger representation of stocks and bonds issued by smaller companies. Some index options and interest rate options are traded on the AMEX. The AMEX started as an alternative to the NYSE. It originated when brokers began meeting on the curb outside the NYSE in order to trade stocks that failed to meet the Big Board's stringent listing requirements. The AMEX now has its own trading floor. In 1998 the parent company of the NASDAQ purchased the AMEX and combined their markets, although the two continue to operate separately. AMEX is also called The Curb. NASDAQ NASDAQ is a computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over-the-counter stocks and some listed stocks. Unlike the AMEX and the NYSE, the NASDAQ (once an acronym for the National Association of Securities Dealers Automated Quotation system) does not have a physical trading floor that brings together buyers and sellers. Instead, all trading on the NASDAQ exchange is done over a network of computers and telephones. Also, the NASDAQ does not employ market specialists to buy unfilled orders like the NYSE does. The NASDAQ began when brokers started informally trading via telephone. The network was later formalized and linked by computer in the early 1970s. In 1998 the parent company of the NASDAQ purchased the AMEX, although the two continue to operate separately. Orders for stock are sent out electronically on the NASDAQ, where market makers list their buy and sell prices. Once a price is agreed upon, the transaction is executed electronically. NYSE The New York Stock Exchange. The NYSE is the oldest and largest stock exchange in the U.S., located on Wall Street in New York City. The NYSE is responsible for setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants. It traces its origins back to 1792, when a group of brokers met under a tree at the tip of Manhattan and signed an agreement to trade securities. Unlike some of the newer exchanges, the NYSE still uses a large trading floor in order to conduct its transactions. It is here that the representatives of buyers and sellers shout out prices at one another in order to strike a deal. This is called the "open outcry" system, and it usually produces fair market pricing. In order to facilitate the exchange of stocks, the NYSE employs individuals called specialists who are assigned to manage the buying and selling of specific stocks and to buy those stocks when no one else will. Of the exchanges, the NYSE has the most stringent set of requirements in place for the companies whose stocks it lists, and even meeting these requirements is not a guarantee that the NYSE will list the company. The NYSE is also called the Big Board.
Exchange Traded Fund (ETF) Generally, a security that tracks an index and represents a basket of stocks or bonds like an index mutual fund, but trades like a stock on an exchange. The term ETF also encompasses exchange-traded notes, currency trusts, commodity trusts, HOLDRs, and MACROshares.
Exchange Traded Note (ETN) A debt security linked to the return of an index (e.g., the Dow Jones AIG Commodity Index). Investors can trade an ETN on an exchange at the market price or receive a cash payment at the scheduled maturity or early redemption, depending on the performance. ETNs do not hold a basket of securities like an Exchange Traded Fund (ETF), and are backed by the credit of the issuer.
Exchange Traded Fund Sponsor (ETF Sponsor) The fund company that sponsors the Exchange Traded Fund (ETF).
Ex-Dividend Date The date on which a stock goes ex-dividend (the interval between the announcement and the payment of the next dividend). An investor who buys shares of a stock or mutual fund on or after the ex-dividend date is not entitled to the dividend.
Expense The price paid to those who manage an investment product in order to cover the operating costs of that investment product.
Expense Ratio for Exchange Traded Funds (ETFs) The annual percentage of an Exchange Traded Fund's (ETF's) assets paid out in expenses. Expenses can include management, transfer agent and all other fees associated with the ETF's daily operations and distribution.
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