2. What do shares outstanding hold to do within judge a stock? What is its significance?

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Answers:   The number of shares outstanding is useful when you look at yield per share. You take the income of the company and divide it by the number of shares which gives you earn per share. You can compare the earnings per share next to other earnings period such as quarters or years, which is a better index than merely net returns or any other earnings number.

For example, say aloud a company has lattice earnings of $100,000,000 and have 10,000,000 shares outstanding. This makes for $10 yield per share. In the next year the company sell 2,000,000 shares to the public for a total of 12,000,000 shares outstanding. The company then make $110,000,000 net yield. Obviously the company makes more money. But it solely makes $9.17 per share (110,000,000 divided by 12,000,000) which is the number you prudence about, when you own one share. The overall returns don't really matter to a shareholder. It is more significant to a shareholder to see how each share perform. This company is not performing as well for its shareholders making $9.17 than when it make $10 per share.

Earnings per share allows you to make such a comparison.

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Shares outstanding is similar to the FLOAT. Basically it is the number of shares available for trading. Now, sometimes a company may repurchase and hold some of their own shares, and than the shares outstanding and float may be slightly different but deeply their similar.

The importance of the shares outstanding is it tell you something about the volatility of a stock. The more shares outstanding hint that it will take closely of buying to make a stock move, up or down. For example intel have 5.7 Billion shares outstanding. On the other hand Crox, have 83 million, the more volatile stock.

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It depends on your investing style. I figure out change flows and divide it among the outstanding shares to come out with a utility of a stock. So I look at the shares outstanding to determine my share of the pie I own and when I feel it is time to buy.

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