Stock Research Glossary: Every Term in Plain English

Price & valuation

• Valuation — What the market is charging for the business — judged against what the company earns, owns, and can grow into.
• Market cap — The stock market's total price tag on the company: share price times the number of shares.
• Enterprise value — The market cap plus the company's debt, minus its cash — the true cost to buy the whole business.
• Price target — The price the analysis believes the stock can reach in its stated timeframe — a reasoned estimate, not a promise.
• Probability-weighted target — One blended target: each scenario's price, counted by how likely the analysis judges that scenario to be.
• Bull case — The optimistic scenario — what the stock could be worth if the important things go right.
• Base case — The middle scenario the analysis considers most likely.
• Bear case — The pessimistic scenario — what the stock could be worth if the important things go wrong.
• Tail case — The extreme scenario: unlikely, but bad enough to take seriously.
• P/E — Price-to-earnings: how many years of the company's current profit you are paying for at today's share price.
• Trailing earnings — The profit actually earned over the last 12 months — the rear-view number, not a forecast.
• P/S — Price-to-sales: the company's total stock value divided by a year of revenue — useful when profits are small or missing.
• EV/Sales — Enterprise value divided by a year of revenue — like price-to-sales, but it also counts the company's debt and cash.
• 52-week range — The lowest and highest prices the stock has traded at over the past year.
• Valuation multiple — A shorthand ratio — like price-to-earnings — for how much the market pays per dollar the company makes.
• Rerating — Investors deciding to pay more (or less) per dollar of the same earnings — the price moves without the business changing.
• Add zone — The price range where the analysis would consider buying more, provided the business is still on track.
• Fair value — What the analysis calculates the business is actually worth, independent of today's quote.

Company financials

• TTM — Trailing twelve months: the most recent 12 months of results added together, regardless of fiscal year.
• Gross profit — Revenue minus the direct cost of making the product — before overhead, research, interest, and taxes.
• Gross margin — The share of each sales dollar left after the direct cost of making the product.
• Operating income — Profit from running the actual business — after overhead, before interest and taxes.
• Operating margin — Operating profit as a share of revenue — how much of each sales dollar the core business keeps.
• Net income — The bottom line: what remains after every cost, including interest and taxes.
• Earnings per share — Total profit divided by the number of shares — profit expressed per single share.
• Earnings power — The profit the business could reliably produce in a normal year — the engine's size, not one quarter's reading.
• Free cash flow — The cash left after running and investing in the business — real money available for buybacks, debt, or a cushion.
• Cash burn — Spending more cash than the business brings in — the gap must be covered from savings or new funding.
• Cash runway — How long the cash on hand lasts at the current pace of spending.
• Balance sheet — The financial snapshot: what the company owns, what it owes, and what's left over for shareholders.
• Net debt — Debt minus cash on hand. Negative net debt means more cash than debt.
• Current ratio — Short-term assets divided by short-term bills — can the company pay what's due this year?
• Liquidity — How easily the company can put its hands on cash to cover near-term needs.
• SG&A — Selling, general and administrative: the overhead of running the company — salaries, marketing, offices.
• R&D — Research and development: spending on inventing and improving products.
• EBITDA — Profit before interest, taxes, and paper charges like depreciation — a rough gauge of core operating earnings.
• Book value — What shareholders would own on paper if the company sold its assets and paid its debts.
• Gross proceeds — Money raised from selling new shares or debt, counted before fees come out.
• Operating leverage — How strongly profit reacts when revenue changes — it magnifies both good and bad quarters.
• Unit economics — Whether each individual sale makes or loses money once its own costs are counted.
• Consolidated — All of the company's business lines added together into one number.
• Margin — The share of each sales dollar that survives as profit — more margin means more room for error.
• Capex — Money spent on long-lived things — factories, equipment, data centers — rather than day-to-day costs.

Shares & capital

• Shares outstanding — How many shares exist in total — the number of slices the company is cut into.
• Buyback — The company buying back and retiring its own shares, so each remaining share owns a bigger slice.
• Dilution — New shares being created — every existing share then owns a smaller slice of the same company.
• Float — The shares actually available for public trading — locked-up insider holdings don't count.
• Short interest — How many shares have been borrowed and sold by investors betting the price will fall.
• Short squeeze — A sharp rally forced when price-fall bets go wrong and those investors must buy shares back to exit.
• Public offering — The company selling a batch of new shares for cash — it adds shares, so existing holders are diluted.
• Insider activity — Executives and directors trading their own company's stock — watched as a hint of their real confidence.
• Institutional ownership — How much of the stock is held by large professional funds.
• ATM offering — An “at-the-market” program: the company may quietly sell new shares into the market over time — flexible cash raising, steady dilution.

Market & trading

• Guidance — The company's own public forecast for upcoming results — raising or cutting it often moves the stock more than the results themselves.
• Consensus — The average of analysts' forecasts — the bar a company must clear to “beat expectations.”
• Estimate revisions — Analysts nudging forecasts up or down as new facts arrive — the direction of the nudges often drives the stock.
• Downgrade — An analyst lowering their rating or price target on the stock.
• Analyst upgrade — An analyst raising their rating or price target on the stock.
• Volatility — How violently the price swings around — higher volatility means bigger moves in both directions.
• Catalyst — A coming event with the power to move the stock — earnings, a launch, a ruling, a funding date.
• Overhang — A known worry hanging over the stock — pending litigation, a big seller — that keeps buyers cautious until resolved.
• Moat — A durable advantage — brand, network, switching costs — that protects profits from competitors.
• Turnaround — A company working its way back from a weak stretch — the bet is on recovery, not momentum.
• Compounder — A business able to reinvest its profits at high returns year after year, letting value snowball.
• Compound interest — Growth earning growth: gains are reinvested so each period's return is earned on a slightly bigger base — small rates become large outcomes given enough time.
• Index fund — A fund that simply holds every stock in a market index, so it earns the market's overall result at low cost instead of betting on any single company.
• Basis points — Hundredths of a percentage point: 50 basis points is 0.50%.
• Take rate — The cut a platform keeps from each transaction it processes.
• SBC — Paying employees in shares instead of cash — a real cost that also quietly adds to the share count.
• Support level — A price where a falling stock has repeatedly found buyers.
• Resistance level — A price where a rising stock has repeatedly stalled.
• Moving average — The average price over the last N days, drawn as a line to show the trend through the noise.
• RSI — Relative Strength Index: a 0–100 gauge of how overheated or oversold recent trading is.
• Year over year — Compared with the same period one year earlier.
• Sentiment — The prevailing mood around a stock — what investors feel, as distinct from what the numbers say.
• Momentum — The tendency of a moving price or trend to keep moving the same way in the near term.

Monsaic methodology

• Conviction — How confident the analysis is in its own call — separate from how large the upside might be.
• Risk/reward ratio — Modeled upside per dollar of modeled downside — 2 : 1 means twice as much to gain as to lose if the scenarios play out.
• Asymmetry score — Monsaic's 0–45 score for how lopsided the setup is — how far the realistic upside outweighs the realistic downside.
• Kill criteria — Pre-agreed tripwires that would break the investment case — if one trips, re-examine rather than rationalize.
• Position gate — Monsaic's checklist verdict on whether the setup currently earns a position at all, and how large.
• Thesis — The core argument for why this stock could work — the claim the rest of the report stress-tests.
• Starter position — A deliberately small first purchase — enough to follow the story, small enough to be wrong comfortably.

See the vocabulary in use

Every definition here is the same copy Monsaic shows inside its reports. Read a covered stock’s excerpt to watch the vocabulary do real work on a live verdict.

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