Stock Market Glossary
ADR
Depositary receipt that can make foreign shares tradable on another market.
In brief: Depositary receipt that can make foreign shares tradable on another market.
Meaning in practice
An American Depositary Receipt represents economic rights in shares of a foreign company and is often traded in US dollars. The ratio, fees, dividend processing and voting rights can differ from the original share, so investors should identify the underlying security and its currency and custody costs.
Context for investors and traders
When analysing a company, this term is meaningful only alongside the business model, industry and development across several reporting periods. One-off effects, accounting choices and the corporate cycle can move individual metrics.
How to use this in practice
A robust assessment looks across several reports: revenue quality, operating margin, investment, debt and cash flow can tell a different story from one metric. Changes in the competitive setting also matter more than an isolated snapshot.
What to keep in mind
Compare companies with suitable peers and check whether one-off effects, buybacks or accounting choices shift the metric. A strong number does not automatically explain a share valuation.
