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Questions tagged [stock-valuation]

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

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1answer
318 views

Why does Apple issue new common stock every year (even though it has enough cash)?

Apple has so much cash. It really doesn’t have to raise additional capital yet every single year it issues new common stock. Why is that?
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3answers
173 views

Why is S&P average PE ratio increasing since 1990?

PE ratio is one of the best tools to evaluate equities. A company that has positive earnings will have a positive PE ratio. But what is considered a reasonable PE ratio appears to be changing over ...
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2answers
307 views

Why do stocks that haved dropped since the launch still get good ratings?

I noticed that the price of some stocks (e.g. CA.PA) have gone down since the launch (in this case ~20 years ago, to -80% at almost linear rate). But for some strange reason the analysts still ...
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1answer
40 views

Discounted Cash Flow Model - Are Massive Variations Expected?

After reading "How to Analyse Companies and Value Shares" by the FT, I've made my own Excel DCF model for GlaxoSmithKline. The problem is that it gives huge variations in Enterprise Value if I only ...
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1answer
40 views

Discounted Cash Flow Model - Getting Started

I'm trying to create a DCF model for GlaxoSmithKline, but I'm struggling with some of the figures. According to Shares Magazine the net profit for 2018 is £1,345m ((sharesmagazine.co.uk/shares/share/...
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0answers
73 views

“Smoothed” growth rate used to calculate implied equity risk premium

On Aswath Damodaran's website, he publishes an annual dataset that calculates the current equity risk premium implied by current market prices. The dataset can be found here: http://www.stern.nyu.edu/...
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3answers
198 views

The rule of thumb that if the growth of a company is 20% per year, then the P/E should be 20, what is this rule based on?

I think it was a rule of thumb that came from T. Rowe Price: if year-after-year growth of earning per share (EPS) is 10%, then its P/E ratio could be 10, as expected by people and seen as reasonable. ...
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0answers
74 views

What is the meaning of the cellular signal icon in Bloomberg stock data?

What is the meaning of the icons highlighted in the image below taken from today’s European Market Opening as shown on Bloomberg?
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1answer
94 views

Why are negative valuation values not included in comps analysis?

Why are negative valuation ratio values not included in comparative company analysis? This appears to be a general practice ("Valuation: Measuring and Managing the Value of Companies, University ...
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1answer
69 views

How to calculate portfolio change percentage in periods with buy events?

Im having problems figuring out how to calculate my portfolio profit/loss percentage over longer periods, where buy/sell events are involved. Example: Day 01: I buy shares for $100K Day 30: ...
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17 views

Leveraged buyout (LBO) valuation: multiples

When you build a LBO analysis, you have entry multiple (maybe work back from your required IRR) and exit multiple that are usually based on EBITDA. Do you always choose EBITDA? What about other ...
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2answers
142 views

What does a company's equity (stock / share) actually cost? [duplicate]

A company may issue debt to raise fund and pays interest based on cost of debt (YTM), and this costs company money. And I can see how debt costs company. A company may issue stock to raise fund as ...
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2answers
115 views

Even though company revenue is increasing share price has fallen alot

I am totally new to the stock market. I am trying to learn about the implications of a company's fundamentals on its stock price. I have gone through many companies and saw their fundamentals. I came ...
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1answer
28 views

Is there a method to estimate stock downside via comparative analysis or some analogous method?

Wondering if there is a method to estimate stock downside other than adjusting / sensitizing on estimates in a DCF analysis (or relying on only special situations where you can see the price change ...
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3answers
123 views

Tracking Company Buybacks

According to Investopedia, "[c]ompanies [can] buy back shares on the open market over an extended period of time and may even have an outlined share repurchase program that purchases shares at certain ...
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3answers
128 views

What is the correlation (if any) between earnings report and stock price movement?

This might sound like a dumb question (I'm relatively new to the stock market). I know this doesn't happen, but why doesn't the stock price directly move in accordance to the earnings reported vs what ...
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5answers
303 views

how to determine value of time share

At a resort, we were offered to buy one week of timeshare. It sounded gimmicky and their pricing was not clear. The starting ask price was a one time $50k payment and a yearly maintenance fee of ...
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1answer
96 views

Logic of using Parent's PE when valuing RemainCo and SpinCo of a spinoff?

Reading an older book by Maurece Schiller, there is a section about ways to value companies planning / undergoing a spinoff. In it, he uses the parent's PE multiple to value the earnings of both the ...
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0answers
27 views

How to distinguish the difference between Market Profile according to Volume and Price?

Recently, I am concerned about using Market Profile in trading. There are two ways using Market Profile including either consideration of volume or change of price. Generally speaking, if we consider ...
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1answer
38 views

How can TTM PE be less than current PE in rising earnings situation?

Reading Investment Valuation by Aswath Damodaran, there is a section that says that in periods of rising earnings, the forward PE yields consistently lower values the the trailing PE, which, in ...
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0answers
123 views

How can a single unit of a business be worth more than its entire market cap?

As of today, June 26th 2019, Thyssenkrupp AG has a market cap of approximately 7.3 billion euros. On May 10th 2019, Thyssenkrupp AG announced that it will take its elevator business public in an IPO. ...
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1answer
133 views

Why should an investor care about a company that never pays a dividend? [duplicate]

If a company never pays a dividend, as a shareholder, why should I care if it's doing great and has positive media coverage and hype? What's in it for me? Is the fact it's reported, and analysed ...
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1answer
88 views

Valuation of a startup unicorn [closed]

By all those news reports of privately held startups that are considered unicorns worth more than a billion: I get they reach it by +equity-liability + future earnings. I don't see any way of ...
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1answer
89 views

Relation between par value, offering price and trading range

I recently saw a public offering of securities stating the following: We are offering 2,000,000,000 shares of our common stock, par value $0.00001 ("Common Stock"), at an offering price of $0.001 ...
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1answer
220 views

How many Tesla Y are ordered/reserved so far

Tesla Y is allowing to order ( similar to Tesla 3 reservation but allowing to choose configuration). I remember when Tesla 3 was announced there were plenty of information released by Tesla and 3rd ...
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1answer
30 views

How to count average EPS for interval of years if in this inverval was a split?

For example, I want count average EPS for 10 year for company and this company has stock split (2 to 1) in this 10 years. Do I need to take this into account calculating average EPS for this 10 ...
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1answer
131 views

What is “corporate drag”?

What is meant by the term corporate drag? Have seen this in some valuation analyses associated with a numerical cost value, but googling terms like "corporate drag" or "corporate drag value" do not ...
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0answers
42 views

How to quantify the cheapness (or overvaluedness) of a stock from dividend yield theory perspective?

Is there a way to quantify the potential cheapness (or overvaluedness) of a stock's price when comparing current and average dividend yield from a dividend yield theory (DYT) perspective? For example ...
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0answers
80 views

Comparing values of 5s and 7% notes

I am a beginner in investment. I was reading Security Analysis (Sixth Edition) by Benjamin Graham, and on page 63 the last paragraph is written that: A third kind of analytical conclusion may be ...
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2answers
171 views

Calculations for stock market target price?

I'm looking at various stocks on finance websites and noticed that some of them don't have a 1-year Target price. How can I calculate estimated target price of a stock myself based on the company's ...
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1answer
714 views

Why can unissued capital stock exist?

Unissued capital stock allows a company to issue shares at any given time, diluting the ownership of current shareholders. This does not seem logical nor fair. At any given time, shouldn't 100% of the ...
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3answers
78 views

If a company's “shareholders equity” has been increasing, why would the market value of their stock decrease?

There are companies whose "shareholders equity" in their balance sheet have been increasing due to positive earnings, but whose stock prices in the markets have dropped. Why is this happening? Isn't ...
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5answers
256 views

Why isn't the retained earnings of a public company always distributed back to the shareholders?

Shareholders own a public company, so why shouldn't all of a company's income be distributed back to them? Why are dividends (if any) just a small fraction of a company's retained earnings?
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1answer
56 views

What are the ways to price a holding company?

I would like to know how people value holding companies. I guess the most famous one is Berkshire ($BRK.A - $BRK.B). And others exist. These holdings usually have a lot of exposure to realestate, PE ...
3
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1answer
129 views

P/E as market capitalization / net income

Price/earnings ratio is defined as: P/E = Share Price / Earnings per Share If we multiply both the numerator and the denominator with the number of shares, we get: P/E = Market Capitalization / ...
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1answer
97 views

Diversification over Profits?

Everyone claims that its very important to diversify your portfolio to reduce risks and increase the possibility of long time profits. There are basically 3 industry sectors that I know rather well ...
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1answer
56 views

Vanguard CRSP total index versus a value and growth combination of the same index?

I am currently researching Vanguard Mid-Cap and Vanguard Small-Cap indexes. The methodology for inclusion in these indexes is outlined in the CRSP Methodology Guide. According to the guide, inclusion ...
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2answers
373 views

Warren Buffet's calculation of the value of the company - very low discounting rate

I was read the book "The Buffett Way". The book claims that Warren Buffett uses a simple calculation to calculate the intrinsic value of a company. The regular way is to estimate future earnings &...
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4answers
2k views

Does short-selling hurt companies' stock price in the long-term?

Today, I've read a Bloomberg article on latest Musk tweet tantrums, where he, among other things, mentioned this: Short-sellers are value destroyers. Should definitely be illegal. Is that ...
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2answers
156 views

What do you think the fair price of this stock is based on these summarized financial statements? [closed]

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 ...
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3answers
90 views

Buyback & Split

I receive stock options as part of my compensation package. The stock split a few years ago and rumor has been its about time to split again. Then the company announced a pretty big stock buyback ...
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2answers
4k views

Shorting a stock after dividend

Theoretically, the price of a stock should always fall whenever a dividend is paid out to shareholders. Is this true in practice? If it is, I can just short the stock before the dividend is paid and ...
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3answers
147 views

Does price of stock reflect earnings

If a company's earnings keep rising and the stock price keeps falling because of other factors such as lawsuits, tariffs etc., is there any guarantee that the price will rise eventually? When does ...
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2answers
76 views

Earnings speculation stocks

Is it a good idea to buy a stock before its earnings come out if I believe that there will be a surprise and then sell after the report comes out? Will the gains be substantial enough for me to take ...
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2answers
226 views

Why is SHLD trading at ~$2 when it has $-38 book value?

I took a look at SHLD financial statements and I cant understand why SHLD is trading at ~$2 when it has -$38 book value and a highly negative P/E? What am I missing?
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1answer
376 views

Does Yahoo finance adjust ETF's historical data for splits and dividends? (not stocks or shares)

On the ETF's graphs I see there are steep falls. There is a legend indicating the ETF was split 1:10. However like Stocks or Shares, I don't see the price being adjusted for splits. Is this correct, ...
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1answer
1k views

Can I short a stock for a long amount of time?

The next recession is inevitable, if what I read is to be believed. Whether it happens tomorrow, or in 10 years, it's coming. Why shouldn't I short many stocks, and hold on to them for whatever ...
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2answers
170 views

How do stocks rise?

If a stock shows great performance on the income statement, will the prices rise gradually or immediately after the release of information to the public?
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1answer
212 views

What are the mechanics of tracking stock?

I'm curious about tracking stock. Take, for example, NASDAQ:DVMT. It's a tracking stock issued by Dell for VMWare (NASDAQ:VMW), which is partly owned by Dell. The idea is that people could invest in ...
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2answers
145 views

what kind of stock graph is this?

this is the same pic with time frame I found this stock,but it has an unusual candlestick pattern,it is a pennystock.