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Glossary

 A-B   C   D-F   G-L   M   N-O   P   R-S   T-Z  

D
Depreciation
Downgrades

E
Early Entry Long
Early Entry Short
Earnings/Dividend Rank
Earnings Per Share
Effective Tax Rate
Exchange

F
Fair Value

D

Depreciation

Depreciation is a periodic charge to expenses that represents an allocation of the cost of assets used in production. For industrial companies, it includes non-cash charges for obsolescence, wear on property, current portion of capitalized expenses (intangibles) and depletion charges. For utilities, it includes amounts charged to income to compensate for the decline in useful value of plant and equipment.

Downgrades

Stocks whose Opinion was downgraded from either LONG to NEUTRAL or from NEUTRAL to AVOID the previous day.

E

Early Entry Long

An early Entry Long Candidate is a stock which has a Neutral opinion and is approaching a significant area of resistance. Each stock has an Entry Price which is used to determine when the stock has broken through the resistance area. Other characteristics of these stocks are the current price is within 5% of their Buy Stop and have a bullish U/D Volume Slope. The Score will be +3 or greater. The stock should only be bought if the stock closes above the Entry Price indicating that it has broken through resistance. Early Entry Longs Candidates can be found in Stock Watch under the Situations drop down and in the Stock Analysis tab under Trading Ideas.

Early Entry Short

An Early Entry Short Candidate is a stock which has a Neutral opinion and is approaching a significant area of support. Each stock has an Entry Price which is used to determine when the stock has broken through the support area. Other characteristics of these stocks are the current price is within 5% of their Sell Stop and have a bearish U/D Volume Slope. The Score will be -3 or lower. The stock should only be shorted if the stock closes below the Entry Price indicating that it has broken through support. Early Entry Short Candidates can be found in Stock Watch under the Situations drop down and in the Stock Analysis tab under Trading Ideas.

Earnings/Dividend Rank

This is S&P's computerized measure of common stocks based mainly on long-term earnings and dividend performance (not to be confused with S&P debt ratings). Rankings are as follows:
  • A+ Highest
  • A High
  • A- Above Average
  • B+ Average
  • B Below Average
  • B- Lower
  • C Lowest
  • D In Reorganization
  • NR No Ranking

Earnings Per Share

Earnings per share (EPS) refers to net after-tax income of a corporation applicable to each share of common stock. It is calculated by dividing net income less preferred dividends for a reporting period by the average number of outstanding common shares for that period. Earnings per share can be calculated on a primary basis and a fully diluted basis. Fully diluted earnings per share assumes that all common stock equivalents (convertible debt, convertible preferred, warrants, and rights) have been changed into common stock. If no common stock equivalents exist, primary earnings per share will equal fully diluted earnings per share. Earnings per share can vary widely.
EPS (TTM) refers to earnings per share for the trailing 12 months of reported earnings, which is the most recent 12 months. EPS (Last Year) refers to earnings per share for the full fiscal year most recently reported. EPS (Two Years Ago) refers to earnings per share for the full fiscal year prior to the most recently ended fiscal year.

Effective Tax Rate

For banks, this refers to actual income tax expense divided by earnings before taxes. For industrial companies, it is actual income tax charges divided by earnings before taxes. For utilities, it is actual income tax expense divided by the total of net income and actual income tax expense.

Exchange

Exchange on which the security is listed. The exchanges used by Market Edge are NYSE (New York Stock Exchange) AMEX (American Stock Exchange) and NASDAQ

Fair Value

Fair Value, S&P's proprietary quantitative model, seeks to outperform the market by buying undervalued stocks and selling them when they reach maximum price appreciation. The model calculates a stock's weekly fair value, the price at which we believe an issue should trade at current market levels, based on fundamental data such as earnings growth potential, price-to-book value, return on equity and dividend yield relative to that of the S&P 500 index.

Stocks are ranked in five tiers. Tier 5 is the highest and contains stocks considered the most undervalued. These are issues with a Fair Value considerably greater than their current price, implying superior price appreciation potential. Stocks in the Tier 4 category are considered moderately undervalued, with Fair Value modestly higher than their current prices. Tier 3 includes stocks whose current prices most closely approximate their Fair Value. Tier 2 stocks are modestly overvalued, while the current prices of the stocks in Tier 1 substantially exceed their Fair Value.

Using momentum and other analyses, the timing index determines whether a stock's price trend is strengthening or weakening, which helps investors to pick the right time to buy and the right time to sell. The timing index is noted by a "+" or a "-" next to each stock's fair value ranking.

As for the earnings surprise rankings, stocks are divided into five tiers, designated by A through E. Tier A stocks are most likely to show future positive earnings surprises. Stocks in Tier B are second most likely to show positive earnings surprises. Tier C includes stocks that are most likely to show future earnings in line with analysts' expectations. Stocks in Tier D are those that are second most likely to show future negative earnings surprises. Tier E stocks are most likely to show future negative earnings surprises.



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