Where to Find A Stock's Beta?
I'm a college student trying to learn how to do DCF model on my own--i'm just curious--can you tell me where i can find the beta of a stock?
How to find a company's beta?
There are several ways that you can find beta for use in a company analysis. The main two ways that you can find a beta is by using a financial data site such as yahoo finance or a software such as Bloomberg. The other method would be to perform a regression analysis against the market. Our users explain below.
Best approach, in order:
- Bloomberg: calculates betas for you, probably the most reliable calculation. Assuming you have a lab in your school that has it, use bloomberg. Alternatively, your school might have access to CapIQ, or FactSet, you can pull up a company's beta from them. There's a service called Barra that also calculates betas.
- If none of those approaches exists - some of the free sites like Yahoo are a last resort, since they contain mistakes and the methodology is unclear.
- You can do your own regression as described above, but it suffers from its own problems
Why Shouldn’t I Use Financial Data Sites to Find Beta?
Many users recommend using Yahoo Finance or Google Finance to find the beta for a company; however, other users shared some caution about using the beta from those sites.
Beta of stock as reported by Yahoo or CapiQ isn't always simply the covariance of the asset to the index. Yahoo adjusts the beta upwards to 1using a weighted average to account for short term beta calc risk
Yeah don't forget that the Yahoo Finance beta will be levered (i.e. reflecting the current capital structure of the firm) and, frankly, it may just be plain old wrong. But you know what they say, you pay peanuts, you get...
Using Regression Analysis to Find Beta
Our users explained how to find Beta by yourself below:
Run a regression (Excel function: slope) comparing the delta of the target company's stock price with the delta of the S&P 500.
However, user @DarkPool” shared caution about using this method:
Be careful about the S&P500 regression analysis. That index doesn't apply to all stocks (i.e. foreign). Don't forget to unlever and relever the beta.
Check out more with the video below:
Read More About Beta on WSO
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Really? lol Yahoo Finance
Run a regression (Excel function: slope) comparing the delta of the target company's stock price with the delta of the S&P 500.
The shortcut would be to use Cap IQ or Yahoo Finance or something like that.
Be careful about the S&P500 regression analysis. That index doesn't apply to all stocks (i.e. foreign). Don't forget to unlever and relever the beta.
http://tradingevents.blogspot.com/p/recommended-reads.html
You can find it on google finance as well.
Like, for this stock: http://www.google.com/finance?q=NYSE:ERF
Good catch DarkPool, totally forgot about that.
To the OP - while you can certainly use the Beta number from Google, Yahoo, et. al., I think you can pick up some useful corporate finance concepts by running the regression analysis.
Beta of stock as reported by Yahoo or CapiQ isn't always simply the covariance of the asset to the index. Yahoo adjusts the beta upwards to 1using a weighted average to account for short term beta calc risk.
Best approach, in order: 1. Bloomberg: calculates betas for you, probably the most reliable calculation. Assuming you have a lab in your school that has it, use bloomberg. Alternatively your school might have access to CapIQ, or FactSet, you can pull up a company's beta from them. There's a service called Barra that also calculates betas. 2. If none of those approaches exists - some of the free sites like Yahoo are a last resort, since they contain mistakes and the methodology is unclear. 3. you can do your own regression as described above, but it suffers from the problems described above.
Yeah don't forget that the Yahoo Finance beta will be levered (i.e. reflecting the current capital structure of the firm) and, frankly, it may just be plain old wrong. But you know what they say, you pay peanuts, you get...
MSCI Barra projected beta at Alacra...
Beta of stock as reported by Yahoo or CapiQ isn't always simply the covariance of the asset to the index. Yahoo adjusts the beta upwards to 1using a weighted average to account for short term beta calc risk
Alternatively, if you have faith in your ability to identify a group of comparables (you can often find comp groups through bloomberg or other services), unlever their betas, take the median and relever it to the capital structure of the company you're looking at.
This is primarily if you're trying to find the beta for a privately held company, keep in mind.
Unlevered Beta = Levered Beta / (1+ ((1- Tax Rate)*(Debt/Equity)))
Best of luck figuring it out.
Don't get confused when you see different betas for the same stock, some sources use 2 years of weekly data, others 5 years of monthly data. Beta, correlation coefficient etc... do change over time due to parameters instability.
Beta - Different from Various Sources (Originally Posted: 07/24/2016)
The Beta of a company is different from various sources (i.e., Yahoo! FInance, Bloomberg) and can have a significant impact on the valuation. How do I decide which source to use for the Beta value?
It probably wouldn't hurt for you to calculate beta on your own so you know what the underlying inputs are. It's inherently dangerous to rely on these external data sources as you don't know how exactly they're adjusting the figures or over what time period their beta covers. Even thought the calculation of beta is easy, as they say in accounting, "garbage in, garbage out".
If you ultimately decide to use one of these data providers (not recommended), be sure to at least try to figure out how they go about calculating beta so you can increase the confidence you have that you're comparing apples to apples if you are going to look at multiple companies.
Makes sense. Thanks for the input!
Ive calculated Beta myself using S&P for the market data. The result was a Beta of 0.78 (using three years worth of daily return data). Yahoo! Finance states 0.58 and i don't know what they used to calculate it. I'll play around with different Beta values just to see how much the valuation changes.
It can change a lot if someone is using monthly for a year or two. Not a big deal.
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