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hey guys it's adrian here the canadian in a  t-shirt and today i'll be breaking down how to   read a stock quote using questrade whether you are  a seasoned investor or a total beginner it's so   important to research and analyze the stock before  you put your money into it and the first step   is the stock quote you'll see a lot of numbers  on a stock quote and it can be overwhelming so   in this video i'll walk you through all of these  metrics like the bid price ask price market cap   dividends earnings per share and price to earnings  ratio if you don't know what a stock is or what   a dividend is make sure you watch my millennial  investing guide videos to learn those fundamentals   and then come back to this video i'll be walking  you through a star quote on questrade which is my   favorite online broker in canada but the same  information applies to any stock page on yahoo   finance google finance or another broker like  wealthsimple if you want to learn how to actually   buy a stock or how to open an investing account  with questrade check out my other tutorials to   see it step by step also note if you are using the  newer and more basic user interface with questrade   i recommend switching back to the old version  which is now called questrate edge i have a   whole video showing you how to switch back to the  old version that's the one that i use every day   and i highly recommend it it just has more useful  information on the screen before we jump into the   walkthrough i want you to know that understanding  a stock code is incredibly useful but it only   provides a snapshot summary of a stock's value  it doesn't tell you the whole story looking at   a stock chart or these metrics on their own is not  enough to evaluate whether a stock is worth buying   there's a lot more research involved but analyzing  the stock quote is the first step so let's jump in   here is the quest trade stock page i'm looking at  one of my favorite stocks td toronto dominion bank   first off at the top left we have the ticker  symbol and that's td.t.o a ticker symbol is a   short abbreviation which represents the stock it's  usually between one and four letters in length so   instead of writing out toronto dominion bank  every time you just have to look up the symbol   td when it comes to canadian stocks i always  recommend adding the suffix dot to the dot to   just specifies that we want the stock on the  toronto stock exchange right next to the ticker   symbol we see the full company name in this case  toronto dominion bank and then in brackets we have   which stock exchange the stock is traded under  in this case the tsx the toronto stock exchange   since this is the tsx we know that all the  numbers on this page will be in canadian dollars   but if we look up an american company like apple  ticker symbol is aapl apple inc and you can see   the exchange is nasdaq the nasdaq and the new  york stock exchange are the two largest american   stock exchanges the nasdaq focuses more on tech  companies whereas the new york stock exchange is   more general so if you see nasdaq or nyse new york  stock exchange all the numbers on this page will   be in us dollars for canadian companies always  specify the dot to suffix to ensure it's traded   on the tsx a lot of the big canadian companies  are also listed on the new york stock exchange   so if you just search td on its own by default  it will go to the new york stock exchange and all   these numbers will be in us dollars and we don't  want that because as canadians we want to buy   with canadian dollars we want to avoid exchanging  currency so for a canadian company like td make   sure you search td dot to now this stock is on the  tsx so all these numbers are in canadian dollars   this big number here is the current share  price and you'll notice that the share price is   constantly fluctuating and that's because this  number here represents the last traded price   and the stock market is currently open  the stock market is open between 9 30 a.m   and 4 p.m eastern time so while the market is open  this stock is being bought and sold every second   at a different price and that's why the price  is always changing just now someone bought or   sold this stock for 93.49 so that's the current  value of the share this red value here tells us   that since the market opened at 9 30 this morning  the share price has dropped by 10 cents or 0.11   again this is short-term performance so we  really don't care about this what we care   about is long-term performance over the course of  years short-term fluctuations over the course of   a day mean nothing and this is the button that  you click to refresh the share price right next   to it it tells you how old this quote is so all  the numbers on the screen here are 15 minutes old   now if we click the button it will update all this  information this is one of the great features of   questrade you get live stock prices for free other  brokers like wealthsimple have a 15 minute quote   delay and with well simple if you want to get live  prices you have to pay a monthly fee i'll cover   that in detail in my upcoming wealth simple review  this is the buy and sell button when i actually   want to buy a stock when i click it it opens up  a side panel where i enter how many shares i want   to buy what account what order type etc i already  have a whole question tutorial showing you how to   buy stocks step by step so click the video up here  to check that out looking at the top right here if   i own this stock it will show information about  my position in this company so i own td stock in   my tvsa account that you see here so on the top  right it tells me my unrealized profit and loss   that means how much has this stock gone up or down  in value since i bought it what this tells me is   my shares of td at this moment have capital  gains of two thousand four hundred dollars   so if i were to sell all of my shares of td  right now i will have made a profit of 2 400   that's just capital gains on top of that i'm  also earning dividends now let's look at the   actual metrics of the stock quote the top  row here pertains to the price of the stock   remember this number here is the last traded price  of 94 dollars and nine cents but also remember   there is no inherent value of a stock the value  of a stock is only what someone else is willing   to buy it for and the stock market really is just  a market you are buying these stocks from someone   else so they want to sell it at a certain price  and you want to buy it at a certain price and   you guys agreed to meet somewhere in the middle  and that is represented by these two numbers the   bid price and the ask price the bid price is the  highest price that a buyer is willing to pay for   the stock and the ask price is the lowest price  that a seller is willing to sell it for the ask   price or the selling price is almost always  going to be higher the price i actually pay   for the stock will be somewhere in between td  stock is one of the most popular quality stocks   on the toronto stock exchange so there isn't  too much of a difference between the ask price   and the bid price this difference is called the  spread and that's because every second of every   day there's going to be thousands of people who  want to buy and sell the stock if this was a very   obscure or undesirable stock you would see a much  larger spread because it's harder for the sellers   to find someone to sell it to because not a lot  of people want to buy it so if you see a large   difference between the ask price and the bid price  that might be a cause for concern the numbers   below don't really matter when we're talking about  quality stocks these bid and ask sizes only really   matter when we're talking about unpopular stocks  that no one really wants to buy or sell stocks on   the market aren't sold individually they're sold  in lots bundles of around 100 shares at that price   so the higher the ask size for example the more  stocks are available to be sold at that ask price   again don't worry too much about these two numbers  for the average investor they really don't matter   in this corner here we see some information on the  changing stock price over the course of the day we   see the daily high and the daily low since the  market opened this morning we can confirm these   numbers by looking at the stock chart the chart  just shows us how the share price changes over the   course of time here we're looking at a one year  time range but if we look over the course of one   day you can see how the share price has changed  since 9 30 this morning when the market opened   all the way until when the market will close  at 4 p.m so the daily high today was 94.37   that would be somewhere around this peak here  and the daily low was 93 and 21 cents and that   would have been at this low point here the open  price tells us the share price when the stock   market opened this morning at 9 30 a.m and the  previous close shows us the share price when the   stock market closed the last trading day which  would have been yesterday at 4 pm you'll notice   there's a little bit of a difference between the  previous close and this morning's open even though   the market is closed and that's because of after  hours trading there is far far less trading after   hours but it still can affect the share price  a little bit but don't worry too much about the   daily highs and the daily lows because short-term  performance does not matter what we care about is   long-term performance over the course of years  and that is represented by the 52-week low and   the 52-week high this is just like the daily low  and high except now we're looking over the past   year so this is much more useful here we have the  volume the volume just tells us how many shares   of this stock have been traded over the course  of the day so since the market opened at 9 30   this morning 2.14 million shares of td stock  have been bought and sold we can compare this   to the average volume which is the average daily  volume over the past three months the market's not   closed yet but today we have 2.14 million shares  traded but the average over the past three months   has been 5.6 million which means that today this  stock is not trading as often as it usually does   this isn't a big deal the volume can definitely  change day to day and obviously whenever there's a   market dip or a market rally we expect more people  to be buying and selling as well as if there's   ever any news such as the quarterly earnings being  released but we'll get to that later but what is   important is having a stock with a sizeable volume  because the higher the volume the more liquid it   is meaning it'll be much easier for us to sell  the stock and get our money back if we need it we   want to avoid those undesirable stocks with a low  volume because if there's no volume we can't find   someone to buy our stock from us and if we can't  find anyone to sell our stock to we can't get our   money back and so we're left holding onto the bag  of something that's essentially worthless last   trade is just the last time this stock was bought  or sold the stock market is still currently open   so it shows today's date may 4th but if we looked  on the weekend the last trade would have been   friday afternoon next up we have market cap  or market capitalization and that represents   the value of the company how much is this company  worth td is one of the biggest companies in canada   in fact it's the second largest company in canada  right now with a market cap of 196 billion dollars   so if we wanted to own the entire company of  td bank it would cost us 196 billion dollars   but how do we buy a company we do it by  buying shares remember a stock represents   a unit of ownership of a company so if we  want to own a hundred percent of the company   we have to buy a hundred percent of the shares  and that's where this dollar amount comes from   the value of a company is just the total value of  all of its shares right here we can see that there   are 1.81 billion shares of td and at this moment  each of these 1.8 billion shares are worth 94.40   so if we multiply these numbers we get the market  cap let's pull up the calculator and we'll keep   this all in billions so we take 1.81 billion  shares each of them are worth and forty cents   giving us a total market cap of a hundred and  seventy billion dollars at this very moment   all the shares of td and thus the company as a  whole is worth almost 171 billion dollars this   is a little bit lower than the market cap posted  here of 196 billion dollars and that's because   this market cap here is not updated every single  day the share price of td has dropped a little   bit recently and so this larger market cap here  was calculated using that larger share price with   a large market cap of almost 200 billion dollars  we would call td a blue chip stock or a large cap   stock compare this to a penny stock or a small cap  stock which might have a market cap of less than a   billion or maybe in the hundreds of millions those  smaller cap stocks are definitely riskier and more   volatile here we have the earnings per share and  the p e ratio but i'm going to save them for the   end of the video because they are more complicated  but they are very important so first let's talk   about the bottom left corner here which is all  about the dividends a dividend is basically a   reward that the company pays out to investors  to incentivize them to continue holding on to   the stock it's a source of passive income but not  all companies pay a dividend usually it's only the   well-established and secure companies that have a  long history of years or even decades of reliable   income and cash flow those are the companies that  pay out dividends the companies that don't pay   dividends are usually smaller less established and  growing a big example of this is tech companies   they would rather use their cash flow to reinvest  in new products and new technologies to grow their   company even further from within looking at  a tech stock like facebook ticker symbol fb   they don't pay out a dividend so you see the  dividend and dividend yield are both zero   and make sure you check out my dividends explained  video up here to learn everything you need to know   about dividends the two most important numbers  you'll see here are the dividend amount and the   dividend yield the div number here is the actual  dollar amount and dividends that you'll receive   per share that you own and dividends are paid  out every month or every quarter so every three   months so in this case for every share of td stock  that you own td is going to pay you a dividend   of 89 cents in my case i own 135 shares of td  each one pays out a dividend of 89 cents so every   quarter so every three months i'm gonna receive a  dividend of a hundred and twenty dollars in cash   that's great but just looking at the dividend  per share this dollar amount it's very hard to   compare this dividend to another company's  dividend a better way to do that comparison   is to use the dividend yield the dividend yield  is just the total amount of dividends over the   course of a year divided by the share price and  that gives us a percentage td's dividend has a   yield of 3.6 percent that tells us if we buy a  thousand dollars worth of td stocks we're gonna   receive 3.6 of that as income over the course of  a year to calculate the dividend yield we need to   find the total dividend for the whole year each  quarter td pays out 0.89 dollars in dividends   so we take this number and we multiply it by  four since there are four quarters in a year so   over the course of the year each share of td will  pay us a dividend of three dollars and 56 cents   now we divide by the share price which is 94.20  giving us a dividend yield of about 3.7 percent   again don't worry that the calculated yield  doesn't exactly match the yield posted here   the yield posted here in questrade is not updated  every minute of the day i mentioned that dividends   can either be paid every month or every quarter  in this case the td dividend is paid every quarter   and we saw that in our calculation because  we took the dividend per share the 89 cents   we multiplied by four to annualize it and then we  divided by the share price and we got a yield very   close to the yield posted here on questrade so  from our calculation we know for sure that td pays   out a quarterly dividend but what if a stock pays  out a monthly dividend let's look at ryokan ryokan   is a reit a real estate investment trust and a lot  of reits pay out monthly dividends but how can we   be sure again we assume that it's a quarterly  dividend and then we do the same calculation   and see if our calculated yield matches the yield  posted here so now we take the dividend per share   which is 0.085 assume it's quarterly so  we multiply by 4 and divide by the current   share price which is 23 dollars and 36 cents  multiply by a hundred and we get 1.45 percent   this calculated yield is much less than the posted  yield of 4.4 percent so this is not a quarterly   dividend it's a monthly dividend so this dividend  amount is not paid four times a year it's paid 12   times a year so instead of multiplying by four  in our calculations we should have multiplied by   12. so to get to the proper number we have to just  triple this number multiply it by three since four   times three is twelve so multiply by three and we  get a yield of about four point four percent this   matches the yield we see on quest rate confirming  that this pays a monthly dividend and we also have   the x dividend date this is the cutoff date  which means in order to receive the dividend   you have to own shares of this stock before this  date if you buy shares of the stock after this   date you won't receive the dividend then you'll  have to wait till the next quarter or the next   month the ex-dividend date is not the date you  receive the dividend the dividend payment date   is usually a few weeks later i cover this in  greater detail in my dividends explained video   down at the bottom we have the earnings date this  is the date where the company will release their   quarterly financial earnings that includes their  gross revenue their expenses and their net income   if the news is good news the stock price will  probably jump up if it's bad news we'll probably   see a dip this section at the bottom right is  not very important it only pertains to investing   with margin power meaning you're investing with  borrowed money i do not recommend that you invest   with borrowed money you should only be investing  with your money investing with borrowed money   takes on much greater risks so it's only suitable  for a more advanced investor i'll be covering how   this margin power works in an upcoming video now  let's talk about two of the most fundamental stock   indicators the earnings per share and the price to  earnings ratio why do we buy stocks we invest in   a company because we expect that company to earn  us money to make a profit you wouldn't want to own   a company that's losing money we want a company  that's profitable and as an investor we get to   collect a share of those profits we only want to  invest in a company that has positive earnings a   net income meaning that the revenue that comes in  exceeds their expenses but it's hard to compare   companies of different sizes how do you compare  a trillion dollar company like apple which makes   hundreds of billions of dollars in profits to  a newer company that's just getting started one   way to normalize or even the playing field is to  take the net income the earnings and divide by the   number of shares that gives us the earnings per  share eps every quarter a company will release   its financial earnings this is public information  so you can go on a free website like yahoo finance   look up a company click on financials and you  can see their quarterly financial earnings here   you'll find their gross revenue their expenses  and their net income so over the past year td   made almost 15 billion dollars in net income so  we take the net income around 14.5 billion dollars   and we divide by the number of shares of td  remember that's number here 1.81 billion shares   and that gives us an earnings per share of around  eight and that roughly matches the eps we see here   on questrade when it comes to earnings per share  the higher the better we want the company to be   making us more money in fact this number means  that for every share of td stock that we own   the company will be making about eight dollars  this is a useful number to compare against   past performance let's say that next year td  released a new product and they started making   more money they would now have a higher earnings  per share and that's a good thing on the flip side   if the earnings per share decreases that could be  a bad sign if the earnings per share goes so low   that it's around zero that means that the  company's expenses and revenue are about the same   meaning that they have almost no cash flow and  that can be trouble the worst is if we have a   company with negative earnings per share that  means the company is losing money let's look at   a company like snapchat ticker symbol snap you can  see here that the earnings per share is a negative   number brackets means negative if the company has  a net loss only one or two quarters or for a year   that's okay but if it's consistently losing money  that is a red flag another useful thing we can do   with the eps is evaluate the sustainability of  its dividend by calculating the dividend payout   ratio this tells us what portion of a company's  income goes out as dividends and how much it   gets to keep for itself the calculation is total  dividends for the year divided by the net income   so for td the dividend per share is 89 cents and  that's every quarter so to find the dividends for   the whole year we multiply by four so every single  share of td pays out three dollars and 56 cents in   dividends but remember the eps the earnings per  share tells us that for every share of td the   company makes eight dollars and eighteen cents so  we just divide these two numbers so we take these   dividends three point five six and we divide by  the earnings per share 8.18 and that gives us a   dividend payout ratio of about 43 percent that  means that only 43 percent of the company's net   income goes out as dividends leaving them with 57  of their net income to reinvest in themselves and   grow as a company this means that the dividend  is likely sustainable if the payout ratio was   over a hundred percent that means that the company  is losing money is bleeding itself dry just to pay   out those dividends and that could be trouble so  the eps helps us evaluate the profitability of a   company but what if we want to analyze the value  of a company even though a company is profitable   we don't want to buy the stock if it's overpriced  for that we use the price to earnings ratio or p   e ratio the price to earnings ratio is very  simple you just take the current share price   and you divide by the earnings per share so the  current share price is 94.42 divide by the eps   and that gives us a price to earnings ratio  of about 11.5 don't worry if this number   doesn't match exactly the pe ratio you see here on  questrade the p e ratio is an indicator telling us   if the company is undervalued or overvalued here's  another way to look at it a p e ratio of 14 tells   us that the average investor is willing to spend  14 for every dollar that the company makes when   it comes to the p e ratio a lower number is better  a high number tells us that the share price just   doesn't justify the profit that the company is  making and so the company is likely overvalued   a low p e ratio implies that the company is  undervalued so will likely be buying this stock   at a discounted price a general rule of thumb  is that a good p e ratio is below 15 or below 20   but this does depend on the industry and the  sector there are cases with quality well-valued   companies with larger p e ratios of 30 or 40 and  that's okay remember the p e ratio does not tell   the whole story but if you see astronomical  p e ratios of 200 300 500 that's definitely   a cause for concern and very likely that the  company is overvalued that's what we saw with   companies like tesla and shopify over the past  two years they had massive p e ratios above 500   because their share price shot up off the charts  but they weren't making the profits to justify   this in fact tesla didn't even make a profit until  last year that doesn't mean that these companies   won't continue to grow in the future but the  higher the p e ratio the harder it is to justify   buying these stocks at those inflated prices so  be cautious and do further research one of the   main purposes of the p e ratio is to use it as  a comparison tool one you can use the p e ratio   to compare a company's current value to its past  value as an example let's look at shopify over the   past two years shopify had an astronomical price  to earnings ratio consistently above 500 a clear   indication that it was likely overvalued now over  the past several months we've seen a significant   drop in the share price and now you can see the  price to earnings ratio is a much more reasonable   value of around 27. again this doesn't tell the  whole picture further research is required but   seeing a more reasonable p e ratio now compared to  a year ago tells us that the current share price   is likely closer to its true value and it might  be a better time to buy the stock so the p e ratio   is very useful to track the value of this company  over the course of time another main benefit of   the p e ratio is that it equalizes the playing  field allowing you to compare a larger company   with a smaller company but they have to be in  the similar industry it isn't fair to compare   a utility company which has very reliable income  to something like a tech company you're comparing   apples to oranges speaking of utilities let's look  at one of my favorites for this ticker symbol fts   and you can see that this has a very reasonable  p e ratio of about 22. let's compare this to   another utility company like canadian utilities  ticker symbol cu and this utility company has a   significantly higher p e ratio of 37 and again  this single metric is not enough to determine   which one of these two stocks is better but just  looking at this one data point it implies that for   this might be better value for our dollar and just  to be transparent i personally own shares of both   canadian utilities and fortis and the difference  in p ratios is not so jarring in this case   but if one company had a p e ratio of 15 and  another one had a ratio of 50 that tells you a   different story the p e ratio only makes sense  if the company has earnings if the company has   negative earnings so they're making a net loss you  won't have a p e ratio going back to our example   with snapchat this company has negative earnings  so they have a negative earnings per share   and thus they don't have a p e ratio their p e  ratio is blank so there you have it that's how you   read a stock quote and perform a quick analysis  of a stock the same information applies for any   broker but in canada questrate is my favorite and  if you don't have an account and you want to get   started with questrade click my referral link  in the box below to get 50 in commission free   trade rebates for the first 30 days when you  sign up that basically means that your first   10 stock trades will be commission free that saves  you 50 plus i'll get a small referral bonus as   well i showed you a quick glance of my investing  portfolio but if you'd like to see my entire tfsa   and rrsp portfolio hit that join button down  below to gain access to my exclusive videos and   to see what stocks i'm buying every few weeks this  membership program will cost five dollars a month   so if you'd like to help support my channel i  would really appreciate it but don't just blindly   copy what i do but now that you know how to read  a stock quote i hope that seeing my portfolio will   help you get started thanks for watching guys and  be sure to like comment and subscribe if you found   this video helpful every thumbs up and comment  really does help me build this channel on youtube   and hit that bell icon to be notified of my new  videos and if you'd like to follow me on instagram   or facebook at canadian t-shirt click my link in  the box below or click the links on my home page   thanks everyone and i'll see you guys on the next  episode of the canadian in a t-shirt bye guys