How to Calculate Average Stock Price in Market Capitalization

by Calla Hummel

Market capitalization is the market value of a company at a given point in time, which is calculated by multiplying all outstanding shares by the share's current price. Investors use a current share price quotation for the company, which is an average of current sell prices, when calculating market capitalization. To find the average share price, simply approach the calculation from the opposite side.

Find the current market capitalization by entering a company's ticker symbol in the search box at the top of any Motley Fool webpage. The site directs you to the company's profile when you hit "search." Market capitalization is listed as "Market Cap" with other financial data on the left side of the page.

Find a copy of the company's most recent income statement. Companies list the shares in circulation on their income statements, which they file every quarter with the Securities and Exchange Commission (SEC). The SEC publishes all this information on its online database, which is called EDGAR.

Go to the end of the income statement and locate "Weighted Average Common Shares Outstanding" and then circle the number under the "Basic" entry.

Divide the market capitalization by the number of shares in the "Basic" entry to reach price per share.

Tip

  • Share prices change constantly while markets are open and dividing market cap by shares outstanding does not give you the most accurate information. For more up-to-date pricing, look at the share price listed on the company profile that the Motley Fool generates when you enter a ticker symbol in the search box. You can even look at the share price's daily range and 52-week range to see where it's been.

About the Author

Calla Hummel is a doctoral student studying contraband in international political economy. She supplements her student stipend by writing about personal finance and working as a consultant, as well as hoping that her investments will pan out.

Photo Credits

  • new york stock exchange image by Gary from Fotolia.com