Glossary

We’ve assembled definitions for and examples of many financial terms. Have a financial terminology question. The answer is probably here.

Alpha

Alpha is a risk adjusted return using beta as the risk measure. The higher the alpha the better, as it describes the level of risk adjusted performance in excess of the benchmark (i.e., S&P 500, NASDAQ Composite, etc.).

Annual Earnings Change (%)

The historical earnings change between the most recently reported fiscal year earnings and the preceding fiscal year earnings.

Annual Net Profit Margin (%)

The percentage the company earned from gross sales for the most recently reported fiscal year.

Annual Sales Change (%)

The percentage change in sales between the most recently reported fiscal year and the preceding fiscal year.

Beta

Beta is a measure of systematic risk, or the sensitivity of a manager or stock to movements in the benchmark. As another risk measure, beta attempts to measure the movement of an asset relative to the broad market. A beta of 1 implies that you can expect the movement of a stock or manager return series to match that of the benchmark used to measure beta. In other words, if a stock or portfolio had a beta of 1.10, it can be said that the asset has historically moved higher and lower than the market by 10%. Similarly, if an asset had a beta of 0.80 then it has historically moved 20% less than the market – both up and down.

Current Ratio

A company’s current assets divided by its current liabilities. A measure of balance-sheet strength.

Estimated EPS Change (%)

The change in the analysts’ mean earnings estimate for the current fiscal year from the last month, last three months, and last six months to the current month.

Latest Quarterly Earnings (%)

The percentage change from the latest quarterly earnings report compared to the same quarter one year earlier.

Market Value

The value placed on a company by investors, obtained by multiplying the current price of the company’s stock by the number of common shares outstanding.

Mean Return

A stock’s average monthly total return. Total return is price change plus (+) dividends.