I have been trying to make a valuation by reading the financial statements, but I believe I am just guessing. I have an idea, but I do not understand completely. Can I get a valuation and a short explanation as to how the valuation is came up with? The reference i'm trying to understand is:


Quarterly: Quarterly

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    You can do a comparables or DCF valuation analysis using the financial statements, although, you will need more thorough financial statements then the ones provided in the link. – NuWin Aug 22 '18 at 4:21
  • @NuWin the only information I have are those though. How can I come up on which stock to invest to given those information? – Pherdindy Aug 22 '18 at 5:08
  • Valuations are a guesstimate at best, they are usually based on biased assumptions and can vary greatly from one analyst to the next. Technical analysis of price action is the only analysis based on unbiased facts - the price. – Victor Aug 22 '18 at 8:24
  • @Victor I guess intrinsic value of a stock is more of the approach I guess and is just arbitrary. I'm just lost in technical analysis because all the stock that I bought that "broke out" just got slammed dunked at the end of the day and I just lose money. I do cut my losses but I cut more than I gain. What worked for you? – Pherdindy Aug 22 '18 at 8:32
  • Like if you look at the stock in this main post you'll see it's a 17% down just today after a breakout and you won't know if that's consolidation or not unless you know the story why it broke out. And according to a stock broker I met recently, the breakout was due to an increase in profits recently and they valuated the company's market value to be around 2 – Pherdindy Aug 22 '18 at 8:38

With only a single financial statement showing two periods, fundamental analysis is difficult. You are going to have to make a LOT of assumptions to determine a fair price. Is the cash flow in the period normal or abnormal? Will the growth in cash flow in that period be sustainable? What factors might hinder future growth? Are there a lot of non-cash activities that would help or hurt the company in the long run?

Another method is by comparing multiples. Look at ratios such as price/earnings (P/E), price/sales, and price/book to see if the stock appears to be "undervalued" relative to other companies in the same market. You still need to be cautious, though, since the denominator in these ratios could be unsustainable (earnings or sales could be inflated due to uncommon activity) or there are other factors not accounted for in these ratios to justify the high or low price.

I believe I am just guessing

You are - but so is everyone else. Bottom line - with only that much information, your guess is as good as anyone else's

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  • Thanks this is a good start to look into fundamental analysis. I'm thinking of creating a checklist to look into for evaluating a company that can give me a general idea of the overall health of a company using fundamental analysis. Then further manage risk by combining with technical and statistical analysis. (Automated & holistic screening algorithms on all stocks in database based on momentum, volume, trend intensity, RSI, and etc. -> fundamental & technical analysis of stock/market health -> stock selection & re-balancing period) – Pherdindy Aug 23 '18 at 5:16

Stocks are worth nothing, zero, until someone places a Bid.

(Things like "analysis documents" from brokerages and "spreadsheets" from corporations, are: advertising. They are marketing materials.)

The stock is worth zero because it has no bids.

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  • But then i'm interested in finding out on which stock would most likely go up in value. Technical analysis alone is not enough for me. I want to further lessen my risk by buying stocks that are good but undervalued – Pherdindy Aug 22 '18 at 5:49
  • Unfortunately and sadly you cannot lessen your risk. Of the huge, huge number of full-time professionals who manage trading accounts (funds, hedge funds, traders .. etc etc etc) the vast majority of them lose money year after year. If there was a way to "lessen risk" they would do it. – Fattie Aug 22 '18 at 5:51
  • There are risks that cant be avoided for sure. But diversifying into a portfolio and choosing good stocks that are good both technically and fundamentally can probably give you a higher chance of success I believe because they will be more robust thus less risk. So i'm trying to understand whether the market value of the stock right now is overvalued or undervalued by trying to determine the intrinsic value of the stock. If it's undervalued and with good potential in the future and good management of the company then probability of it going up is higher – Pherdindy Aug 22 '18 at 6:10
  • @Pherdindy Yes, there are stocks that are "more likely" to be "safer" than some others (think blue-chip vs. .COM-boom-bandwagoners) (but there are no guarantees (think Enron, Pan Am)). What you will very rarely find are over- or under-valued stock. The "current price" (using the term slightly loosely) will have been reached by people and institutions far more versed in reading balance sheets, following company, corporate and political news (plus a degree of gut feeling and guesswork), making trades far larger than you ever will. Any "probability of going up" will already be in the price. – TripeHound Aug 22 '18 at 6:51
  • @TripleHound so for single persons like me what can you suggest that I do besides pray for the best? I believe the assumption of technical analysis is that everything is already accounted for in the price. So if that's the case I shouldn't bother with fundamentals at all? If it's just a pointless act of effort to try to learn the value of a company – Pherdindy Aug 22 '18 at 7:17

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