All right now that we know why it is imperative to include a share price slide in the company profile
of a listed company let's learn how to make one in this lesson.
We will talk about the content that goes into our share price chart.
Let's get to it.
The data set we need for a company's share price graph is a time series of closing share prices with
daily weekly or monthly observations.
To put things into perspective.
Normally we would add another equivalent time series for a relevant stock market index.
This could be S&P 500 or Dow Jones Industrial Average DJIA for a U.S. company which is part of these
indexes.
If it is a smaller U.S. company which is not a part of the aforementioned indexes we must find a relevant
index for it one where it is included.
If it is a UK company part of the FTSE 100 This would be the benchmark index to use and so on.
In addition we should remember that there are specific sector indexes that can be used to benchmark
performance within an industrial sector across different regional or global stock markets.
For example S&P Global Oil index S&P global information technology sector index Europe consumer discretionary
index by MSCI World Financial Index by MSCI and so on S&P Dow Jones and MSCI among others are two major
providers of such stock market indexes and the data sets can be fed into your spreadsheets from sources
like Bloomberg and fact set.
Another useful piece of information that can be shown on a company's share price chart is volumes traded
of the respective companies stock for the same period we would expect to see spikes in trading volumes
associated with big share price moves.
Also the average trading volume that show how liquid a company's stock is or what proportion of the
total company's stock is regularly traded and readily available to change hands on the market.
The more liquid a stock is the higher trading volumes it can sustain without big share price moves.
Another factor that determines stock liquidity is free float.
The portion of shares held by public investors readily willing and able to trade their shares as opposed
to locked in long term shareholders like investment funds.
Sometimes a table with top insider and institutional shareholders and their respective stakes indicating
the proportion of free float can be added to the slide tables with trading stats like average daily
weekly monthly and annual traded volumes can also be added depending on the scope of our presentation.
This may be relevant if the audience of our presentation is interested in acquiring a certain percentage
stake in a company on the market.
All the necessary data can be sourced from market data providers like Bloomberg facts set and even Yahoo
Finance and Google Finance for free.
If we want to make the chart even more informative we can add text boxes with news about events that
could have affected the company's share price.
When researching for such events we would first go through the company press releases published on its
Web site which would normally include any price sensitive information.
Then we would do a news run around the dates of many significant share price moves.
OK we are doing excellent.
Let's end the lesson here before we go too much into what actually goes into the slide layout.
After all this will be the topic of the next lesson.
Thanks for watching.