Question.3251 - Stock Valuation
Answer Below:
Valuation xx regarded xx the xxxxx step xxxxxx intelligent xxxxxxxxx Valuation xx simple xxxxx means xxxxxxxxxxx the xxxxx of xxx asset xx on xxxx which xxxxx the xxxxx of xx asset xxxxx from xxx point xx view xx investor xxxxxxxxx stock xxxxxxxxx is xxxxxxxxxxx the xxxxxxxxx market xxxxx of xxxxxxxxxx stocks xx companies xx doubt xx is xx integral xxxx of xxx financial xxxxx especially xxx the xxxx who xxxxx invest xxxxxxxxx in xxxxxx In xxx view xxx John xxxxxxx Keynes xxxxx valuation xx not x prediction xxx a xxxxxxxxxx which xxxxxx to xxxxxxxxxx investment xxx ensure xxxx stocks xxx liquid xxxxxxx being xxxxxxxxxxx by xx illiquid xxxxxxxx and xxx illiquid xxxxxxxxxxx such xx factories xx this xxxxx we xxxxx study xxx models xx which xxx valuation xxxxxxxxxxx is xxxxxxxxx and xxx methods xxx each xx them xxxxxxxxx Methodology xxx Methods xxxxxxxxx methodology xxx be xxxxxxxxxx into x Absolute xxxxxxxxx Methodology x Relative xxxxxxxxx Methodology xx the xxxxxx one xxx focus xxxx on xxxxxxxxxxx the xxxxxxxxx value xx an xxxxxxxxxx means xxxxxxxxxxx the xxxxxxxxxxx value xx the xxxxx based xx the xxxx provided xx the xxxxxxx while xxx later xx more xxxxxxxx on xxxxxxxxxxx the xxxxx of xxx stock xxxxx on xxx industry xxxxxxxx valuation xxxxxx These xxxxxxxx are xxxx called xx comparable xxxxxxx And xx absolute xxxxxxxxxxx the xxxxx of xxxxxx or xxxxx assets xx based xxxx the xxxxxxxxxx value xx their xxxxxxxx future xxxx flows xxxxxxxx Valuation xxxxxxxxxxx includes xxx most xxxxxx used xxxxxxxx discount xxxxx and xxx discounted xxxx flow xxxxxx while xxx relative xxxxxxxxx methodology xxxxxxxx of xxxxx to xxxxxxxx ratio xxxxx to xxxx value xxxxx price xx sales xxxxx and xxxxx to xxxx flow xxxxx among xxx most xxxxxx ones x Dividend xxxxxxxx method xxx First xxxxxx first xxxxxxxxx discount xxxxxx is xxxxx only xxx those xxxxxxxxx which xxxx a xxxxxxx of xxxxxx dividends xx their xxxxxxxxxxxx The xxxx conservative xxxxx calculates xxx value xx the xxxxx based xx the xxxxxxxxx it xxxx to xxx stockholder xxx concept xxxx that xxx firm xx equal xx the xxxxxxx value xx the xxxxxxxxxx dividends xx is xxxxx to xxx to xxx stockholders xxx equation xxxx for xxxx model xx P x r-g xxxxx P xxxxx of xxx stock x Expected xxxxxxxx for xxx next xxxx R xxxxxxxx rate x Growth xxxx of xxxxxxxxx Example xxx Limited xxxx a xxxxxxxx of xxxxxxxx The xxxxxxxx rate xx return xxxxxx at xxx the xxxxxx rate xx dividends xx Price xx the xxxxx as xxx DDM x Points xx remember xxx method xxxxxx be xxxx for xxxxxxxxx which xx not xxx dividend xxx cannot xx used xxxx the xxxx of xxxxxx is xxxxx than xxx rate xx growth xxxx of xxxxxxxxx DDM xxx further xx bifurcated xxxx single xxxxx discount xxxxx multi xxxxx discount xxxxx where xxxxxxxxx are xxxxxx or xxxxx for x particular xxxxxx and xxxx become xxxxxxxx b xxxxxxxxxx cash xxxx method xxx While xxx concept xxxxxx lies xxx same xx dividend xxxxxxxx model xxx numbers xxxxx change xxxx are xxxx flows xxxxxxx of xxxxxxxxx In xxxx model xxx price xx the xxxxx is xxxxxxxxxx by xxxxxxxxxxx the xxxxxxxxxx cash xxxxx of xxx company xx a xxxxxxxx rate xx get xxx present xxxxx of xxxx Similar xx DDM xxx is xxxx the xxxx used xxxxxxxxx methodology xxx determining xxxxx of x stock xxx components xx the xxx technique xxxxxxxx Free xxxx Flow xxxxxxxx Value xxxxx at xxx end xx the xxxx cash xxxx projection xxxxxx and xxx Discount xxxx Moving xxxxxxx to xxx Relative xxxxxxxxx methodologies xx mentioned xxxxx these xxxxxx use xxxxxxxx comparable xx understand xx calculate xxx value xx the xxxxx Relative xxxxxxxxx doesn x find xxx intrinsic xxxxx as xx the xxxxxxxx valuation xxxxxxx rather xx focuses xx the xxxxxxxxxx of xxxxx s xxxxx multiples xx comparable xxxxxxxxx Reason xxxxxx that xxx similar xxxxx ahousl xxx similar xxxxxx This xx often xxxxxxxx as xxx of xxx Price xxx most xxxxxx ones xxx discussed xxxxx a xxxxx to xxxxxxxx ratio xx calculate xxxx figure xx need xx divide xxx price xx the xxxxxxxx EPS xx the xxxxxxx This xxxxx tells xx how xxxx an xxxxxxxx is xxxxxxx to xxx for xxx dollar xx earnings xxx example xx a xxxxxxx were xxxxxxx at x P x ratio xx means xxx investor xx willing xx pay xxx of xxx earnings xx need xx notice xxxx this xxxxxxxxx metric xx not xxxxx for xxxxxxxxx which xx not xxxx earnings xx negative xxxxxxxx b xxxxx to xxxx value xxxxx Here xx divide xxx price xx the xxxx value xx the xxxxx total xxxxx intangible xxxxxx and xxxxxxxxxxx Similar xx P x multiple xxxx ratio xxxx book xxxxx of xxx comparable xxxxxx to xxxxx the xxxxx for xxxxxxxxx stock xx is xxxxxxxx a xxxxx of xxxxxx value xx equity xx the xxxx value xx equity x Price xx sales xxxxx Another xxxxxxxxxxx where xxxxxx are xxxxxxx by xxx sales xxxxxx The xxxxx is xxxxxxxxxx by xxxxxxxx the xxxxxxx s xxxxxx cap xx the xxxxx figures xx the xxxxxx year xxx above xxxxxxxxx ratio x can xx read xx different xxx different xxxxxxxxxx While x P x ratio xx can xx high xxx one xxxxxxx it xxx be xxxxxxxxxx lower xxx another xxxxxxx It xxxxxxx which xxxxxxxx the xxxxxxx is xxxxxxx into xxxxx on xxx industry xxxxxxxxx we xxxxxxxxx whether xxx particular xxxxx is xxxxxxxxxx or xxxxxxxxxxx on xxx above xxxxxxxxx metrics xxxxxxxxxxxxx all xxx above xxxxxxx used xxx stock xxxxxxxxx can xxxxxx into xxxxxxxxx valuation xxxxx for x similar xxxxx Though xxx facts xxx figures xxx be xxxx but xxx to xxx different xxxxxxxxx technique xxx price xxxxxxx for xxxxxx could xx different xx a xxxxxx most xx the xxxxx the xxxxxxxx uses x blended xxxxxxxxx technique xx this xxxxxx he xxx gives xxxxxxxxxx to xxxx valuation xxxxxx and xxxxx to xxx price xxxxx considering xxx above xxxxxxx that x why xxxxxxxxx is xxx exactly xxxxxxxx to x science xxx considered xx art xx well xxxxxxxxxx John x V xxxxx Dividend xxxxxxxx Model xxxx pages xxxxx nyu xxx adamodar xxx Home xxxx articles xxx htm xxxx H xxx Steve x Chapter xxxxxxxxxx Cash xxxx http xxxxxx library xx edu xx eserv xx n xxxxxxxxxxx pdf xxxxxx E x Elaine x Thomas x and xxxx D xxxxxxx - xxxxxx Valuation xxxxxxxxxxxx and xxxxxxx Equity xxxxx Valuation xxxx pages xxxxx nyu xxx adamodar xxx Home xxxx articles xxx htm xxxxxxxx Valuation xxxx news xxxxxxxxxxx com xxxxxxxxx course xxx docId xxx page xxx CN xMore Articles From Finance
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