Google Finance is a good resource to do your initial research to determine whether a company is worth investing in. The good thing about Google Finance is that it provides an overview of the company as well as links to websites with additional information about the stock. The basic pages for Google Finance include a Summary page, News, Related Companies, Historical Prices, and Financial statements. Let’s take a closer look at what’s included.
The Summary page includes several sections and is the first page you will see after you search for a stock symbol. The top section contains the latest stock price, the changes to the price from the open of the trading session on that day, and information about the days price range, market cap, total volume traded that day, shares outstanding, and a couple of popular ratios and metrics.
Price to Earnings (P/E) ratio is the current price divided by the annual earning per share. The lower the number the better since that indicates that the company has a lot of earnings relative to its share price. High growth companies, startups, and many smaller tech companies tend to have high P/E ratios since they have yet to realize their full earnings potential.
Earnings per Share (EPS) is the most recent earnings divided by the number of shares outstanding. The higher the EPS the better.
Dividend Yield is the stock’s dividend as a percentage of its stock price. A company does not need to pay a dividend to be a good investment. Dividends are usually seen in more established companies with solid earnings, however, not all of those companies choose to pay a dividend and instead use excess cash to continue to grow their business.
Beta measures the volatility of the stock relative to the overall market. Values greater than 1 indicate that the stock is generally more volatile than the market, a value of 1 means that the stock tends to correlate with the movements of the market, and a value that is less than 1 indicates that the stock is not as sensitive to market swings.
The chart plotting the price performance over time is one of the most prominent sections of the Summary page. It is a good way to get a quick overview of how the company has done in the past. From a Value Investing standpoint it is most useful to look at the performance for the last 5 years or more. Anything less than that will give you a sense of recent sentiment about the stock, but in value investing you’re looking to track performance over time so the historical price is interesting to look at, but longer trends and analysis of fundamentals in where the bargains are found.
The News section displays links to headlines where that are associated with the stock. The news articles are tagged with letters that correspond to points in time on the chart tracking performance. This is done so that you can see how a particular news item impacted performance at that time. This can be interesting, but for the most part will provide limited value.
The bottom half of the page contains more general information about the company.
The Description section provides an overview of what the company does. It is not meant to be an exhaustive list of products and services that the company delivers, but it should have enough information to get a sense of what market its in and how it makes its money.
Key Stats and Ratios
This section includes several popular ratios that can be used to assess profitability. It is not an exhaustive list of financials that you should be looking and it’s goal is just to let you know whether the company is profitable or not at a glance.
Net Profit Margin is the company’s revenue minus cost of goods sold, operating expenses, interest and taxes all divided by revenue.
Operating Margin is defined as the operating income divided by net sales.
EBITD Margin (Earnings Before Interest, Tax, and Depreciation) is equal to revenue minus expenses while excluding interest taxes and depreciation expenses.
Return on Average Assets (ROA) is net income earned for the year divided by total assets. Similar to ROE, ROA is considered a stat that measures the efficiency of the management team.
Return on Average Equity (ROE) is net income earned for the year divided by shareholders equity. ROE is often considered a stat that measures the efficiency of the management team. An ROE above 10% should be one of the stats used to screen stocks.
Officers and directors
The Officers and directors section lists some of the members of the management team for the company. Note that not all officers or directors may be listed on this page. Clicking on the link for the names will display the bio and compensation for each person. In addition to this section contains a link to recent trades that the officer has performed with company stock.
The Website links might be the most important section of the summary page. The reason for that is that it provides a link to company resources. It is common to find regulatory documents such as the annual report and 10K report on the company’s website in the investor relations section. Those documents provide in depth information about the company, risks, and financial statements.
The Related Companies page lists companies that may be similar to the stock you are researching. While this page may be help you assess competitors it is important to note that the companies listed on the page are there because they are somehow assumed to be associated with the company you are researching. It does not mean this is an exhaustive list, or that the companies on the page are even competitors so don’t assume that they are.
The Historical Prices page is fairly straight forward, it lists the price of the stock on a given date. If the date you are interested is not immediately displayed it is possible to enter a new date range to navigate to the desired date.
The Financials page is one of the most important pages in Google Finance since it allows you to look up information about the financial performance of the company.
As you can see there are several financial statements available. They include the Balance Sheet, Income Statement, and Cash Flow Statement. The statements include quarterly data as well as annual data for each statement for the past 4 years. When calculating intrinsic values you will need more than 4 years worth of data, but to get a quick estimate of value you can use the data available to make assumptions about future free cash flow.