Navigating the Financial Pages

Stock listings in the financial pages of newspapers are essentially price tables with statistical data. They may quote more than one stock exchange—including foreign exchanges—and commodity prices.

Articles include comment and opinion about individual stocks, particularly when something significant occurs that may affect their performance (for example, when a profit warning is issued, when there's a takeover bid, when a new product is developed, or simply when a company publishes its results). Other articles will cover matters of general economic interest—such as interest rates, levels of employment, or how new developments affect the performance of certain sectors.

Below is example data taken from a major newspaper's financial pages, on a day taken at random. We show only certain key information here—the full listing gives much more.

Here's an explanation of what the figures show:

• Stock . Each stock has a unique code—these are usually quite logical. In this case the code is PFE, which stands for Pfizer. The sector in which the company operates is sometimes specified—in this case, the pharmaceutical industry.
• 52-Wk Rng. 52-week range—the highest and lowest stock prices over the last year. If there is a very wide range, it might indicate that the company operates in a volatile sector. Like many financial measures, these figures are most meaningful when used alongside other indicators.
• Div. Dividend—the most recent dividend paid to stockholders. This will depend on many factors, but it can be a useful indication of long term profitability. For example, if dividends and earnings per share have risen consistently over a number of years, it suggests a safer investment than declining or fluctuating figures—or no earnings at all. If the letters "dd" appear in the listing, it means that the company made a loss over the last four quarters.
• Yield %. The annual dividend paid to investors, expressed as a percentage of its current price.
• P/E. Price/earnings ratio—the market price of a stock divided by its earnings per share over the last 12 months. Together with yield, this is the measure most widely used by investors; usually, both indicators will be quoted in financial listings alongside the stock price.
• Close. The stock price at the end of the previous days' trading (on a Monday edition, this will be last Friday's closing price).

If a stock for one company is half the price of another, the most obvious conclusion is that the cheaper stocks are only worth half as much. However, this is totally wrong—stock price on its own means nothing at all. You need measures like P/E and yield to understand a stock's true value. For example, if the lower-priced stock has a higher P/E, it shows that investors are prepared to pay more for it in relation to previous earnings per share, in anticipation of high future earnings—so in fact, it's more expensive than the stock that has a higher market price. Whether investors are right about this can only be shown over time.

Some papers will publish anticipated data, but usually figures like yield are based on historical information. It's important to bear this in mind if you find a stock that appears to offer very high yields. Usually there's a reason for this—most typically, when a company share price has fallen very sharply (perhaps on the publication of poor results or other bad news). Falling share prices push up yield temporarily, so if you see a yield that seems exceptional—especially when compared with other similar stocks—it's vital to investigate what lies behind it.

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