We asked for clarification from Standard & Poors a while back on how to get market cap out of the databases. They sent back the SQL query for it. A query usually looks like this:
SELECT datum FROM databases WHERE criterion
And about as long when you replace the actual names for stuff.
I just mention that for context, because the query was over four pages long. Granted, a goodly chunk of it dealt with currency and exchange issues, something that we don’t have to worry about (yet), but market caps are WAY harder than anyone would expect.
This is further complicated by Portfolio123’s requirement for analytical financial conservatism. You generally do valuations in fully diluted terms. If you want to know how much free cash flow a company is generating per share, then you need to take into account every convertible bond, every bit of executive compensation that hasn’t been cashed in yet, and even, in some situations, every poison pill.
On the other hand, market cap is very much a snapshot, like the balance sheet. How many shares are wandering around RIGHT NOW, and how much are they worth all together? You don’t take into account the bonds, the pay or the pill, because they’re not available, so you wouldn’t use it to, for example, figure out what percentage traded right after the company announced earnings.
That would mean that if you’re using a price to FCF metric, I’d use:
(Close(0)*SharesFD(0,QTR))/FCFTTM
We very nearly always use fully diluted sitewide, with a major exception for “market action” stuff. So it’s not really comparable if you plunk in MktCap as your numerator.
All of that said, Marco and I spoke about this, and we’re investigating improving our treatment of multiple share classes in the market cap calculations. (Valuations and per-shares will continue to use fully diluted.)
And addressing a later response, we have no options information, so something like figuring out how many options are out of the money is beyond us. We are relying upon the financial reporting for the fully diluted count.