Guide to Basic Market Indicators

1. Market capitalization

Market capitalization refers to the total market value of all common shares of a listed company. It reflects investors’ assessment of the company’s value and their expectations for its future profitability. A company’s market capitalization also reflects its standing and influence in the capital markets. Companies with larger market capitalization tend to have greater influence and may have a more significant impact on market fluctuations and trends.

2. Free-float market cap

Free-float market cap refers to the total market value of a listed company’s shares that are available for trading on a stock exchange. While market capitalization includes all issued shares, free-float market cap only includes shares that are freely tradable in the market. Therefore, free-float market cap is typically less than or equal to market capitalization.

Formula: Free-float market cap = Floating stock × Current price

3. Shares outstanding

Shares outstanding generally refer to the total number of all common shares issued by a listed company. In the US market, this figure covers all issued common shares minus any shares the company has repurchased. Under GAAP, repurchased shares, known as treasury shares, are recorded as a contra account that reduces total shareholders’ equity and are excluded from the calculation of market capitalization.

Therefore, the number of shares outstanding for US stocks may be less than the total number of common shares issued. For example, if a company spends USD 100 million to repurchase shares, including this amount in the market capitalization would result in double-counting. Calculation methodology and data source: S&P Global.

4. Floating stock

Floating stock refers to the portion of a listed company’s shares outstanding that is available for trading on a stock exchange. These are shares that have been issued, are held by investors, and are not subject to repurchase, lock-up, or trading restrictions. Floating stock represents the total number of shares available for trading on the market, and is the actual quantity of shares that investors can actually buy and sell.

5. Turnover rate

The turnover rate refers to the frequency at which shares are traded in the market over a given period. It is one of the indicators that reflect the liquidity of a stock.

Formula: Turnover rate = Volume/Floating stock × 100%

6. Amplitude

Amplitude measures the difference between a stock’s intraday high and low as a percentage of the previous closing price. It reflects the trading activity of a stock. Low amplitude indicates the stock is not active, while high amplitude suggests active trading.

7. Bid/Ask ratio

The bid/ask ratio measures the relative balance of buy and sell orders during a specific period. The bid/ask ratio ranges from −100% to +100%. A value of +100% indicates that all orders are buy orders; −100% indicates that all orders are sell orders; 0 indicates that buy (bid) and sell (ask) orders are equally matched.

Formula: Bid/Ask ratio = (Total bid volume − Total ask volume)/(Total bid volume + Total ask volume) × 100%

Note: Bid and ask volumes are calculated based on the market data according to the client’s subscription level. If no market data is available, the bid/ask ratio will be blank.

8. Relative volume (RVOL)

RVOL compares the average volume per minute after the market opens to the average volume per minute over the past five trading days. It measures the relative strength of the current volume compared to recent averages, indicating market sentiment and stock liquidity.

Formula: RVOL = (Current total volume/Minutes since market open)/Average volume per minute over the past five trading days

9. Average price

The average price typically refers to the average trading price of a stock over a single trading day. It reflects the stock’s overall price level over a given period.

Formula: Average price = Total dollar volume (in currency)/Total volume (in shares)

10. Premium/Discount to net asset value (NAV)

The premium/discount to NAV of an ETF reflects the deviation between the fund’s NAV and its market price. A negative rate indicates a discount, while a positive rate indicates a premium.

Formula: Premium/Discount to NAV = (Current price - NAV)/NAV

11. 52-week high

The 52-week high refers to the highest price a stock has reached over the past 52 weeks (i.e., approximately one year).It measures a stock’s long-term price performance and helps investors understand the stock’s price history.

12. 52-week low

The 52-week low refers to the lowest price a stock has reached over the past 52 weeks(i.e., approximately one year).

Financial indicators

EPS (TTM) refers to a company’s earnings per common share over the past 12 months. TTM is the abbreviation for trailing twelve months, meaning the total earnings over the past 12 months.

Formula: EPS (TTM) = Net profit for the last 12 months/Latest shares outstanding

14. Price-to-earnings (P/E) ratio (TTM)

The P/E ratio (TTM), also known as the trailing P/E, is calculated based on the company’s net profit from the most recent four quarters. It reflects the company’s earnings performance over the most recent 12 months and is more timely and accurate than the static P/E ratio. Since EPS is subject to seasonal fluctuations, the trailing P/E also fluctuates accordingly. However, its changes are relatively stable, making it a better indicator of a company’s actual performance.

Formula: P/E ratio (TTM) = Current price/EPS (TTM)

EPS (dynamic) is calculated based on projected or estimated future financial data.

Formula: EPS (dynamic) = Net profit as of the latest financial report/Number of months covered by the current financial report × 12/Latest shares outstanding.

Example: Company A’s cumulative net profit up to the third quarter is $10 million, and its current shares outstanding are 20 million shares. Then, EPS (dynamic) = 10,000,000/9 × 12/20,000,000 = $0.667. This means the dynamic EPS i calculated by estimating full-year net profit based on the cumulative net profit reported in the latest financial report.

16. Price-to-earnings (P/E) ratio (dynamic)

The P/E ratio (Dynamic), also known as the forward p/e ratio, is calculated based on projected or estimated future financial data. It reflects a company’s growth potential, as it takes into account the company’s future profitability.

Formula: P/E ratio (dynamic) = Current price/EPS (dynamic)

EPS (static) is calculated based on the financial data for the most recent full fiscal year.

Formula: EPS (static) = Net profit from the latest annual report/Latest shares outstanding

18. Price-to-earnings (P/E) ratio (static)

The P/E ratio (static), also known as the static P/E ratio, is a relatively stable metric as it is calculated based on a company’s actual earnings data from the previous year. This can help investors understand the company’s profitability over the past year, as well as the market’s assessment of its profitability.

Formula: P/E ratio (static) = Current price/EPS (static)

BVPS refers to the value of each share of a company’s stock. It represents the book value of a listed company’s assets attributable to each share. In other words, it is the book value for each share.

Formula: BVPS = Shareholders’ equity as of the latest financial report/Latest shares outstanding

Note: For the A-share market, adjustments are made to the data from the latest financial report based on subsequent corporate actions such as dividend distributions and share issuance, resulting in a more accurate figure.

20. Price-to-book (P/B) ratio

The P/B ratio is the ratio of the price per share to the BVPS. It serves as a tool for investors to measure and analyze an individual stock’s investment value.

Formula: P/B ratio = Current price/BVPS

21. Dividend (TTM)

Dividend (TTM) refers to the dividend per share paid by a company over the past 12 months (i.e., the most recent four fiscal quarters). It is a key indicator for investors to evaluate a company’s ability to reward shareholders, reflecting its dividend distribution over the past year.

Formula: Dividend (TTM) = Total dividends distributed by the company over the past 12 months/Latest shares outstanding

22. Dividend yield (TTM)

Dividend yield (TTM) refers to the ratio of the dividend per share paid by a company over the past 12 months (i.e., the most recent four fiscal quarters) to the current share price.

Formula: Dividend yield (TTM) = Dividend (TTM)/Current price × 100%