Stock Valuation

The 52-week high refers to the highest market price of a given security over a 52-week (one year) period.
The 52-week low refers to the lowest market price of a security over a 52-week (one year) time span.
Also called the residual income model, the abnormal earnings valuation model is a method for predicting stock prices.
Abnormal rate of return, also known as "alpha" or "excess return," is the fraction of a security's or portfolio's return not explained by the rate of return of the market. Rather, it is produced from the
Abnormal return, also known as "alpha" or "excess return," is the fraction of a security's or portfolio's return not explained by the rate of return of the market. Instead, it is a result of the expertise
The accounting rate of return (ARR) is a simple estimate of a project's or investment's profitability that subtracts money invested from returns without regard to interest accrual or applicable taxes.
An acquisition is the purchase of all or a portion of a corporate asset or target company.
An acquisition premium is the difference between the actual price paid to acquire a company and the estimated real value of the acquired company before the acquisition. It is often recorded as "goodwill"
Alpha, also known as "excess return" or "abnormal rate of return," is one of the most widely used measures of risk-adjusted performance. The number shows how much better or worse a fund performed relative
Altman's Z-score is a financial statistic that is used to measure the probability of bankruptcy.
Arbitrage pricing theory (APT) is a well-known method of estimating the price of an asset. The theory assumes an asset's return is dependent on various macroeconomic, market and security-specific factors.
A Baby Berkshire is a Class B share of Berkshire Hathaway (NYSE: BRK-B). The term also refers to the act of creating a portfolio of the same companies that Berkshire Hathaway invests in and then buying
Beta is a measure of a stock's volatility relative to the overall market. It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month period.
/*-->*/ Callable common stock is an equity stake in a company where either the issuer or a third party has the right, but not the obligation, to repurchase the stock at a specific price after a
Issuers of callable preferred stock have the right (but not the obligation) to repurchase the stock at a specific price after a certain date.
The capital asset pricing model (CAPM) is used to calculate the required rate of return for any risky asset. Your required rate of return is the increase in value you should expect to see based on the
A consensus estimate is a shared prediction of a company's quarterly or annual earnings per share.
A conversion ratio is the number of one security given for another security (usually a convertible security).
Convertible preferred stock is preferred stock that holders can exchange for common stock at a set price after a certain date.
Cost of equity refers to a shareholder's required rate of return on an equity investment. It is the rate of return that could have been earned by putting the same money into a different investment with
Dilution is a reduction in proportional ownership caused when a company issues additional shares.
Discounted cash flow (DCF) analysis is the process of calculating the present value of an investment's future cash flows in order to arrive at a current fair value estimate for the investment.
The dividend discount model (DDM) is a method for assessing the present value of a stock based on the growth rate of dividends.
An earnings estimate is an estimate of a company's future quarterly or annual profits by a market analyst.
The equity risk premium is the difference between the rate of return of a risk-free investment and the rate of return of an individual stock over the same time period. Since all investments carry varying
Event risk is the risk of a negative impact on a company's financial position as a result of an unexpected event like a natural disaster, industrial accident or hostile takeover.
Fair value is an estimate of a security's worth on the open market. There is no one way to calculate the fair value for a security, but calculations typically take into account future growth rates, profit
A falling knife describes a stock which has experienced a rapid decline in value in a short amount of time. Just like a falling knife, you don't want to catch these companies on their way down. [For
Intrinsic value has two primary connotations in the finance world. In the options-trading world, the term refers to the difference between the option's strike price and the market value of the underlying
Generally speaking, large cap companies have at least $8 billion of market capitalization.
Margin of safety is the amount by which a company's shares are trading below their intrinsic value.
The market conversion price is the price at which a convertible security is exchanged for common stock.
Net profits interest is the proportion of net profits paid out to a particular investor, according to his or her percentage stake in the company. 
Orphan stocks is a colloquial term for stocks that analysts and investors seem to disregard.
Paper loss refers to the amount that would be lost on a security if it were sold.
Paper profit refers to the amount you would gain on a security if it were sold.
A passive loss is a financial loss from rental property, limited partnership or other activities in which the investor is not materially involved.
Premium to net asset value (NAV) refers to a situation where shares of a closed-end stock fund are trading at a price higher than the fund's net asset value per share. For example, a fund could be
Present value describes how much a future sum of money is worth today. 
Price efficiency simply refers to whether the price of a security incorporates all the available information about the security.
Pro rata refers to the proportional distribution of a sum across a number of units.
Also called the abnormal earnings valuation model, the residual income model is a method for predicting stock prices.
A retracement is a temporary reversal in the movement of a stock's price. 
Short interest theory suggests that a high level of short interest indicates an imminent rise in the price of a stock.
The speculation index measures the volume of trades on the American Stock Exchange (AMEX) versus trade volume on the New York Stock Exchange (NYSE).
The street expectation is the commonly-held estimate of a company's future performance by market analysts.
Survivorship bias occurs when companies that no longer exist -- due to bankruptcy, acquisition or any other reason -- are not accounted for when calculating investment returns. 
Tail risk is the risk that an investment will change by more than three standard deviations from its mean.
Tax gain/loss harvesting is a strategy for reducing taxes.
Timeliness is a ranking criterion of stocks based on the likely price performance of a stock over a short time period – usually less than 12 months.
A torpedo stock is a stock that rapidly loses market value and follows a downward trend without any sign of recovery.
Toxic waste is an idiomatic expression referring to high-risk assets with reputedly low liquidity.
A company's stock "trades below cash" if its market capitalization is less than the difference between its cash holdings and its liabilities.
The term underperform refers to an analyst recommendation that a stock is expected to do slightly worse than the overall market return.
Undervalued describes a security for which the market price is considered too low for its fundamentals. Some metrics used to evaluate whether a security is undervalued are P/E ratio, growth potential,
/*-->*/ Unrealized gain is increases in the value of an asset that has not been sold. This concept is often called paper profit.
An unrealized loss is a paper loss from holding an asset that has lost value but has not yet been sold.
Wallpaper is slang for a security with minimal to no market value.