Outstanding Shares Overview, Basic and Diluted, Example

In SEC filings, companies will report the total number of shares outstanding on a given day, but in their quarterly and annual figures they must also offer the weighted average shares outstanding. In addition to listing outstanding shares or capital stock on the company’s balance sheet, publicly traded companies are obligated to report the number issued along with their outstanding shares. These figures are generally packaged within the investor relations sections of their websites, or on local stock exchange websites. Understanding a company’s outstanding shares is an essential part of determining its value.

Shares Outstanding Vs. Treasury Shares

• In other words, as in this example, those shares would not be counted if they improve results, which happens most frequently (though not invariably) when the company is not profitable.
• There are a few reasons a company’s total common shares outstanding could change.
• To calculate the weighted average of outstanding shares, multiply the number of outstanding shares per period by the proportion of the total time covered by each period.
• For example, a company has 50 million shares outstanding, but 48 million of these shares are tied to insiders and institutions.

Here’s what you need to know about the different share counts that publicly traded companies use, as well as how you can calculate the number of outstanding common shares. The company does this to reduce the number of outstanding shares, hopefully leading to an increase in the market value of the remaining shares due to the lower supply and larger earnings per share ratio. As mentioned above, a company can acquire treasury shares through a share repurchase program. The company would be buying back outstanding shares to put in its treasury.

Q: How can I find the total shares issued by a company?

• The outstanding stock is equal to the issued stock minus the treasury stock.
• It is important to note that there are various categories of Shares, such as Authorized Shares, Issued Shares, and Outstanding Shares, although all the company shares differ in terms of purpose.
• Often, a company does this to meet listing requirements, which often require a minimum share price.
• A company’s outstanding shares may change over time because of several reasons.
• Investors need to know the float in times like a potential short squeeze to make accurate, well-informed decisions.

As a real-world example, here is some information from Johnson & Johnson’s 2014 year-end balance sheet. The company has 4.32 billion authorized common shares, of which 3,119,843,000 have been issued as of December 31, 2014. Next, 336,620,000 shares were held in the company’s treasury at that time, so subtracting this from the number of issued shares means that Johnson & Johnson had 2,783,223,000 outstanding shares at the end of 2014. Over time, as a company issues more stock options, the firm’s total number of shares outstanding will increase due to employees exercising their options. Typically, a stock split occurs when a company is aiming to reduce the price of its shares. When this takes place, a company’s outstanding shares increase, and a higher degree of liquidity results.

• The Company form, which is one of the most popular forms of conducting business, issues shares to the owners in proportion to the Equity capital they contributed to the business.
• When a company goes public, it issues shares of stock as a way to raise capital.
• First, the company has to do its job and have strong, consistent financial performance, delivering constant earnings growth.
• Most notably, short interest usually is measured as a percentage of the float, rather than shares outstanding.
• These companies aggressively fund their growth by using convertible debt and paying employees with stock incentives.
• For this reason, the SEC requires all public companies to report their outstanding shares in their filings to the SEC, which is public information.

Stock Tips and Stock Market Tricks

Navigating the world of outstanding shares is essential for anyone involved in the financial markets. Armed with this knowledge, investors can make informed decisions, contributing to a robust and strategic investment portfolio. The image below shows a section of Apple’s (AAPL 0.01%) balance sheet from 2016 How to Calculate Shares Outstanding through 2020. The second line from the bottom indicates the number of shares outstanding at the end of each fiscal year, and the bottom line indicates how many new shares were issued by Apple in that year. Total shares outstanding decreased from more than 21 billion in 2016 to less than 17 billion in 2020.

Issued stock is the total number of a company’s sold shares held by shareholders. An increase can dilute the value of existing shares, affecting earnings per share (EPS) and potentially impacting stock prices. Outstanding shares include all held by investors, while float excludes restricted shares. Shares that a company buys back from the open market, reducing the total number of outstanding shares.

Please don’t confuse shares outstanding with authorized stock and issued stock as they are completely different, and shares outstanding is a subset of both authorized stock and issued stock. As we’ve already seen, the number of a company’s outstanding shares can vary over time, sometimes fluctuating a great deal. A company could issue new shares, buy back shares, retire existing shares, or even convert employee options into shares. Once you locate the line item for preferred stock, take note of the total number of preferred shares outstanding. Once you’ve located the company’s balance sheet, find the line item for preferred stock. Once you’ve located a company’s balance sheet through the SEC or on the company’s website, look at the shareholders’ equity section, found near the bottom of the balance sheet.

Weighted Average of Shares Outstanding

So to adjust for this issue, we can use the weighted average of shares outstanding. The calculation for this figure incorporates any changes in the total number of a firm’s outstanding shares during a reporting period. Many stock analysts prefer to use an adjusted measure of outstanding shares that includes the number of potential new common shares that could result from convertible securities. The diluted share count considers all the shares that would be available if all the possible conversions took place. Companies and investors use the number of outstanding shares to calculate important metrics like market capitalization and earnings per share (EPS).

Free Financial Modeling Lessons

On the other hand, if a company does have convertible securities outstanding, the fully diluted share count will exceed the outstanding share count. Outstanding shares include all of a company’s shares held by shareholders as well as all the restricted shares owned by company insiders. However, the outstanding share count excludes treasury shares held by the company itself.

Besides, it can be helpful to understand where the numbers you’re looking at came from. To calculate the number of outstanding shares, investors take the total number of issued shares and subtract the number of treasury shares held by the company as well as the number of restricted shares. Shares outstanding are the stock that is held by a company’s shareholders on the open market. Along with individual shareholders, this includes restricted shares that are held by a company’s officers and institutional investors. Companies typically issue shares when they raise capital through equity financing or when they exercise employee stock options (ESOs) or other financial instruments. Outstanding shares decrease if the company buys back its shares under a share repurchase program.