The factors that influence the price of any stock, including Walgreens stock, fall under three categories: fundamental, market sentiment and technical factors. Each of these categories encompasses various types of indicators that influence stock prices, according to Investopedia.Continue Reading
The first category of factors, the fundamentals, encompasses two main criteria. One of these is company earnings, or its earnings base. The earnings base is determined by earnings per share or free cash flow per share. The other fundamental factor is a valuation multiple, such as the price-earnings ratio. This represents the stock's share of the predicted future earnings of the company, Investopedia explains.
The second category of factors that influences stock prices is technical factors, which affect the supply and demand for the stock. There are many such factors, including inflation, demographics, stock price trends and the strength of competing stocks. These factors sometimes indirectly affect the fundamental factors in various ways as well, states Investopedia.
The third category, market sentiment, deals with the psychology of the people buying and selling the stock. The psychological element adds the greatest amount of unpredictability to the price of a stock. The field of behavioral finance was established to study this phenomenon, Investopedia reports.Learn more about Investing