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Betas and Volatility
Beta is a letter of the Greek alphabet, a vitamin prefix, and a software and statistical term. It also is an investment term indicating a stock’s price as the market changes. A beta of 1.0 is normal, and a beta of 1.50 indicates a stock would move 50 percent more (up or down) than the market average. A beta is used by investors as a measure of safety and risk The higher the beta, the higher the risk and the less appropriate for risk avoidance investors.
Because the stock market is changing from a charging bull to a more indecisive one, the concept of betas becomes more timely. As shown below, the betas of certain stocks are high . That contributes to the BG Index’s volatility.
| American Business Info (ABII) | 1.75 |
| Intergraph (INGR) | 1.40 |
| AutoDesk (ACAD) | 1.25 |
| Landmark Graphics (LMRK) | 1.35 |
| CACI International (CACI) | 0.63 |
| Primark (PMK) | 1.02 |
| Equifax (EFX) | 0.87 |
| Trimble (TRMB) | 1.31 |
| Company | 3Q'95 | 3Q'94 |
|---|---|---|
| American Business Information (ABII) | $0.20 | $0.16 |
| CACI International (CACI) | $0.21 | $0.18 |
| Equifax (EFX) | $0.50 | $0.42 |
| Intergraph (INGR) | (-$.17) | (-$.39) |
| Landmark Graphics (LMRK) | $0.02 | (-$.06) |
| Trimble (TRMB) | $0.20 | $0.19 |
Company News
CACI International (CACI), Arlington, Va., will acquire IMS Technologies, Inc., Rockville, Md., a company that grosses $22 million, for $6.5 million and is expected to add $.05 per share to CACI’s quarterly earnings. Atlanta-based Equifax, Inc. (EFX) reports a few noteworthy items -- a 2-for-1 split effective November 24, 1995; an increase in quarterly dividends from $.155 to $.165; a shareholder rights program initially to trade with the common; and a stock repurchase program. Equifax also recently hired a new CEO (see "BG News," pg. 16). Trimble Navigation Ltd. (TRMB), Sunnyvale, Calif., announced a limited license and marketing agreement with Ericcson Inc., Research Triangle Park, N.C., a unit of Ericcson Telephone; ERICY.
BG Stock Index Drops
October historically has been a tricky, sometimes disastrous time for the stock market. Although the overall market experienced some jitters, it was unchanged for the October period as measured by the Standard & Poors’ 500 index (S&P 500), but a fall of 12% occurred in the BG Index. That’s the first time the BG Index underperformed S&P 500 for the year, with a total gain of 24% versus 27%, respectively. None of the index stocks increased and nearly half posted double-digit declines. Two issues fell more than 20%. Autodesk, Inc, San Rafael, Calif., because of declining revenues fears; and Landmark Graphics due to disappointing earnings. Only Intergraph Corp., Huntsville, Ala., avoided a decline; it was unchanged. Trimble and MapInfo Corp., Troy, N.Y., continued to decline partly because of concerns of future earnings growth. Trimble actually rebounded in October from a point that was lower than its price at the beginning of the year.
Associated Chart being Prepared and Available Soon.
Business Geographics, January, 1996; pp 50.
(This article was reproduced with permission from GIS WORLD Inc., and Business Geographics.)