Driver

What is a 'Driver'

Anything that could materially affect either a company's earnings or the price of its stock. Every company will have its own unique drivers, although some of the most common drivers include:

-The release of a new product or service
-New financing
-Commodity or resource prices
-Activities of competitors
-Prospects of a particular division of a company
-Legislation
-Litigation

Stock drivers have no pure quantitative units of measurement, but are more qualitative in nature.

BREAKING DOWN 'Driver'

The best investors will identify the three or four key drivers for the stocks they own and follow the status of those drivers religiously, knowing that they hold the key to the overall performance of the stock.

For example, Coca-Cola and PepsiCo are both large, established companies that mainly compete with each other. For both Coke and Pepsi stock, the relative market share that one company has over the other is a key driver. For a grocer, like Albertson's, margins are a large driver of company performance, while relative market share is less significant.

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