For questions relating to the valuation of stocks, based on fundamental analysis, market conditions, etc.

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0
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1answer
93 views

What is the point of owning a stock without dividends if it cannot be resold?

If I were to buy a stock of a business that were to live (and grow steadily) indefinitely, and this stock paid no dividends, and could not be sold back to anyone else, what would be the point of ...
5
votes
2answers
131 views

Why would a company like Apple be buying back its own shares?

What is the reason that a company like AAPL is buying back its own shares? Does it have too much cash and it doesn't know what to do with it? So it is returning the cash back to investors?
11
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4answers
1k views

How to calculate how much a large stock position is really worth?

Let's say, completely hypothetically, that I own 1,000,000 shares in Company X, and their share price is exactly $10.00. Theoretically, this is worth $10 million, but obviously if I wanted to ...
0
votes
2answers
31 views

Is forward P/E calculated using current price(if yes, how useful is it)?

From my understanding, F1/F2 P/E is calculated using forward estimated EPS. And It seems to be impossible to predict future price (otherwise everyone just follow the Est. price) However, if it's ...
3
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5answers
270 views

Why do stocks go up? Is it due to companies performing well, or what else? [duplicate]

I searched for this question but I didn't get any convincing answer. What everyone says is that if a company does well (I assume this means the company has good returns on its projects) then people ...
0
votes
1answer
35 views

What's the difference between a company's after-tax profit and their sales/revenue?

Two fundamental analysis formulas have got me confused. One is the EPS (earnings per share) and the other is P/S (price/sales ratio). If I understand the formulas correctly, EPS is calculated by ...
3
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0answers
77 views

How to evaluate growth stocks

What are good metrics to evaluate growth stocks? I have been following the site buffettsbooks.com and it teaches you how to evaluate value stocks based on Warren Buffet's principles. These are ...
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4answers
569 views

Why does selling and then rebuying stock not lead to free money?

From what I understand, stock prices go down when large amounts of the stock are sold (thereby lowering the price to attract buyers), and go up when large amounts are bought (vice versa - buyers rise ...
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0answers
45 views

Preference shares vs. common shares and overall holding structure for a public company?

I am trying to understand the overall holding picture for a listed company — like, there can be preference shares, common shares (free float), etc. My questions are: It would be really great ...
0
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1answer
46 views

Calculation of excess cash for company valuation

I originally mistakenly posted my question as part of another discussion on the topic. It has been immediately transformed into a comment that is unlikely to bring an answer, hence posting it here ...
2
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3answers
117 views

Are investor's preference for dividends justified?

Think about it. Before you get the dividend, you own the stock of the company. The amount to be distributed to you as dividend is in the coffers of the company. After you get the dividend, the money ...
4
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2answers
191 views

How would I go about selling the stock of a privately held company?

My grandfather passed years ago and left me with some shares of a California company. The company is not publicly traded and specializes in dividend income for its investors. I have decided it would ...
0
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1answer
75 views

institutional ownership — why is it so convoluted

Only money.stackexchange can clarify this for me. I'm trying to do due diligence on GoPro (GPRO). From what I can figure out, it has a total float of 123 million shares, of which only 18 million are ...
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0answers
53 views

Calculate a realistic project valuation?

If we have a profitable project where profit is x and cost of equity is y and the project has 0 growth and nothing else changes, then the value according to a perpetuity will be x/y e.g. profit this ...
-1
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1answer
71 views

Pre-valuation of the company [closed]

I am planning to start a company, but it's just an idea with no revenues. Hence, if I approach angel investors 1) What should be the pre- and post-valuation of the company after investors are ready ...
0
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0answers
62 views

Estimating Sale Price of an Asset Manager Using an EBITDA Multiple

I am thinking through a situation where an asset manager is created through the help of a sponsor who takes a revenue share for providing initial funding. I.e. the revenue share is an expense of the ...
-1
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4answers
257 views

Calculating Pre-Money Valuation for Startup

I have founded a company with investment of $250,000. I have been investing and developing this company for 2 years Company is not in market yet and needs external funding of $200,000 to be ...
2
votes
2answers
140 views

As an individual investor, does it always make sense to sell a stock that's gone up due to a merger announcement?

Suppose I hold a stock that's recently had a run-up because another company has made a bid to acquire it. It seems like I should almost always sell the stock in this case, because there are only a ...
-2
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2answers
58 views

Minor stakes bought at a premium & valuation for target company

I would like to understand why when A buys 10% of B at a 50% premium then every B shares seems to rise by 50%. Isn't it a misleading induction ? (See today's market reaction of ALCLS FP). I have ...
2
votes
1answer
68 views

How can I understand why investors think a particular company should have a high PE ratio?

Say a particular stock has a PE ratio of 30. Given that a standard valuation is closer to 10 or 15 times earnings, a PE ratio of 30 implies that investors foresee a lot of growth. How can I ...
1
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4answers
258 views

Problems with Enterprise Value and better valuation techniques

Enterprise Value is often cited as a better measure of valuation than Market Capitalization. The formula for Enterprise Value starts with Market Capitalization and then adds debt and subtracts cash ...
5
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9answers
1k views

What gives non-dividend stocks value to purchasers? [duplicate]

This is a question that has bothered me for awhile about the fundmental nature of the stock market as a whole, and no one has given a satisfying explanation. What is root cause of a stock having ...
1
vote
3answers
256 views

How does 83b election work when paying fair market value at time of grant?

After purchasing restricted stock in a company, so that the amount paid for the stock is exactly equal to its fair market value at the time of purchase, can you file an 83b election at that time? If ...
3
votes
3answers
200 views

What is the valuation of a company based on?

What does the valuation of a company mean, exactly? What is it based on and how is its "correct" value calculated? For example, a valuation of $1 million for a company that has had $50k in profits ...
2
votes
1answer
241 views

Why do many British companies offer a scrip dividend option in lieu of cash?

Some stocks like GlaxoSmithKline, HSBC, Tesco, Unilever all offer dividends every quarterly/yearly, with the option of scrip dividend (opting to use the dividend to purchase shares). Why would ...
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7answers
6k views

Why does the share price tend to fall if a company's profits decrease, yet remain positive?

I often see news reports along the lines of "Company X has posted a profit of $100 million, 20% lower than the previous year." This kind of news frequently causes the company's share price to fall. ...
8
votes
2answers
238 views

Assessing the value of an ETF

I recently read through Graham's The Intelligent Investor and am looking at what index ETFs or Index Mutual Funds it makes sense for me to invest in. As I was considering this I realized that, at ...
4
votes
2answers
198 views

What to consider before buying (exercising) a family member's private company employee stock options, about to expire?

My brother-in-law is leaving a private tech company. He has $100,000 in stock options (fully vested) which he must either purchase, or abandon completely upon his exit. This is not a startup — ...
9
votes
2answers
555 views

Why would a tender offer be less than the market price?

IBM is trading at about $182 at the moment. There is a tender offer from a company to purchase IBM shares at $170. Why would shareholders accept this offer of $170, when they could just sell the ...
-1
votes
1answer
4k views

Calculating a stock's price target

In the book 'Insider Buy Superstocks', he seems to be calculating price targets like this: [last quarter EPS] x 4 x PE = price target Does that look correct? Is he basing PE off the current stock ...
2
votes
1answer
3k views

How do you calculate the P/E ratio by industry?

I would like to know how to calculate the P/E ratio by industry. On this website, it displays the P/E ratio for the current stock, the industry and the sector: FINANCIALS DTV.O ...
6
votes
1answer
648 views

Where can I find P/E and CAPE data for different sectors, countries and market capitalizations

I've been searching for high-quality data on CAPEs (cyclically adjusted price to earnings ratios) for different sectors, countries and market capitalizations. Shiller's Irrational Exuberance website ...
4
votes
3answers
607 views

Why would analysts recommend buying companies with negative net income?

Can anyone explain why some analysts recommend companies in the biopharmacy sector as a "buy" even though they have high R&D costs and no real profit? I followed three companies and I see the ...
4
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3answers
194 views

Benjamin Graham: Minimum Size of the company

In the book "Intelligent Investor", Graham recommends a minimum annual sales figure of 100 Million $ as one of the criteria. How do we adjust this figure for Inflation and a country other than the ...
2
votes
1answer
479 views

Why do PE ratios for small cap stocks tend to be greater than those for large cap stocks?

As a general rule, why is the PE ratio of small cap stocks greater than the PE ratio of large cap stocks? Is it just a coincidence? Or is there a reason?
1
vote
1answer
168 views

Why is Dell currently trading above the buyout price?

Dell is going private at $13.65 per share, so why is it trading at $13.95 per share right now? Does anybody know when the buyout will actually go through? I can't seem to find that information ...
3
votes
1answer
346 views

Can someone explain recent AAMRQ stock price behavior to me?

I'm interested in American Airlines stock (AAMRQ). Recently they announced a merger with US Airways. The resulting company is said to be worth $11B (USD). Tom Horton, the CEO, said that after ...
3
votes
1answer
258 views

What happened to buyers of ABT right before the split?

Abbott Labs (ABT) split into two companies (ABT and ABBV) at the start of the new year. Shareholders of ABT on Dec. 12 received one share of ABBV for each share of ABT they owned on that date. As I ...
12
votes
1answer
12k views

How does a public company issue new shares without diluting the value held by existing shareholders?

When a public company issues new shares, the total number of shares traded in a secondary market goes up. Assuming there is no change in the fundamentals of the company and the profitability, I would ...
1
vote
2answers
209 views

How meaningful is the “stock price” of a stock?

If a visit, for example, stock information for GOOG, I will be given a stock price for every point in time. How meaningful is that stock price? Is it not the actual trades occurring that are ...
2
votes
3answers
148 views

Are there common stock price trends related to employee option plans?

Facebook IPO was May 18th, 2012. I understand that employees are not able to sell their shares until 6 months after the date of IPO (is this correct?). Can we expect the price of Facebook to decrease ...
3
votes
1answer
740 views

What prices are compared to decide a security is over-valued, fairly valued or under-valued?

The Capital Asset Pricing Model (CAPM) for asset i is E(R_i) = R_f + \beta_{i} (E(R_m) - R_f) It can be used for asset pricing We can compare the expected/required rate of return, E(R_i), ...
5
votes
2answers
1k views

Valuation, pricing, and analysis of securities

I was wondering what differences are between valuation and pricing of securities? To me, they seem identical and for identical purposes. If not, what is each of them trying to get from what is ...
14
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4answers
2k views

How does one value Facebook stock as a potential investment?

What techniques would you use to valuate Facebook to determine whether its current stock price is inflated, or whether it represents a good investment?
3
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3answers
8k views

How to calculate stock price (value) based on given values for equity and debt?

If a company has $80 million in equity and $20 million in debt, this means that total firm value = D + E = $100 million. Am I then right to assume that if there are 1 million shares outstanding, then ...
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3answers
202 views

Facebook commonly cited to be worth $100bn. Why is this the most commonly cited valuation?

Ever since Facebook announced they'd IPO, a lot of articles cite their estimated valuation to be about $100bn. This isn't something that's in their S-1, is it? Just curious where this number came from ...
3
votes
1answer
322 views

How do NOLs (Net Operating Losses) affect an investment decision?

[A company trading on the NYSE for $1.85/share] just had a conference call... They have... cash equivalents of $2.27/share. They have more than $1/share in NOLs. NOL, I guess, is Net ...
1
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1answer
97 views

Accounting for splits in a stock price graph

Many companies will have splits of their stock (either forward or reverse). However, when looking at the before and after prices, a raw analysis of the graph would look like the stock lost half its ...
8
votes
2answers
345 views

Any specific examples of company valuations according to Value Investing philosophy?

I would like to read a specific example of how the value of a company is determined according to the "value investing" philosophy. Warren Buffet can be seen on one of his YouTube videos, describing ...
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3answers
4k views

Different ways of looking at P/E Ratio vs EPS

Would it be valid to assume that a stock with a low P/E ratio and also very high EPS is, generally speaking, a better purchase than a stock with that same P/E but lower EPS? My reasoning for this is ...