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Small Cap Explained
How many shares of stock does a small cap company have? An understanding of market capitalization will allow you to calculate the number of shares a company has outstanding. Market capitalization is the total value of a company's outstanding shares. Stock market investors divide the large number of available stocks into large cap, mid cap and small cap based on the market value of each company.
The divisions of the market capitalization breakdown are not carved in stone, but here is one definition. Large caps are companies worth more than $10 billion. Mid cap stocks are valued at $2 billion to $10 billion. The stocks with market values less than $2 billion fall into the small cap category.
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Market Capitalization Calculated
The market capitalization of a company is calculated by multiplying the current share price by the number of shares outstanding. Knowing this, you can make a rough calculation of how many shares of stock a small cap company has outstanding. Look up the current share price of the stock on one of the financial websites like Yahoo Finance or Google Finance. Included on the price quote screen will be the market cap of the company.
As an example, on March 9, 2011, Nordic American Tanker Shipping Company (stock symbol NAT) was a small cap company with a share price of $25.50 and a listed market capitalization of $1.20 billion. Using the market cap definition in reverse, the number of shares is the market cap divided by the share price. For NAT, $1.2 billion divided by $25.50 results in about 47 million shares outstanding.
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Researching Shares Outstanding
Since the market cap of your small cap stock is published on the financial websites, the number of shares outstanding must be available someplace. The place to find the number of shares for a particular stock starts on the investor relations page of the company's website. On the investor relations page, find the most recent quarterly earnings report press release. Most company websites have a menu selection for press releases or earnings reports.
The number of shares outstanding will be listed somewhere in the earnings report. The most common place to find the share number is at the end of the income statement. To convert the net earnings to earnings per share, the earnings are divided by the shares outstanding and the number will be on or next to earnings per share number on the income statement.
Nordic American Tanker does not put a formal income statement in its quarterly earnings releases so you would have to read through the text. The number of shares is listed in the Financial Information paragraphs. For the 4th quarter of 2010, Nordic American Tanker listed average shares outstanding of 46,898,782 -- about 101,200 shares different from the calculation above.
Now pick your favorite small cap stock and find out how many shares of stock the small cap company has issued.
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Wikinvest: Market Capitalization, http://www.wikinvest.com/metric/Market_Capitalization
Nordic American Tanker Company, http://www.nat.bm/IR/index.html
Photo Credit: Wikimedia Commons