Questions tagged [stock-valuation]

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

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Where can I find Industry Standard Stock Prices?

I'm taking up Business Finance and part of my research project is to compare my assigned company's yearly stock prices to the industry standard. However, I do not know where to find this nor am I ...
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3 votes
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Can someone explain this discrepancy in Air France stock price vs. Air France ADR price?

So recently Air France decided to issue lots of new shares, to raise money, making its stock price plummet on the Paris exchange by more than 60%: https://finance.yahoo.com/quote/AF.PA?p=AF.PA&....
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2 votes
1 answer
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Relationship between interest rates and DCF discount rates

I've been reading that interest rates lower the over future cash flows of equities, hence their decline as money can be moved elsewhere for better returns. What is the direct relationship between ...
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1 answer
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Valuation Multiples for Growth Stocks

I recently started hearing about Valuation Multiples after the recent market drop. Many of the stocks which went higher during the pandemic have come down to 2019 level. ZM is an example. In 2020, ZM ...
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1 answer
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Combining DCF and P/B

If you have two companies with the same value according to DCF, but they differ in their equity. Let's assume company A has 1M USD in equity while company B has 0M USD equity. This means that company ...
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2 answers
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How can a company's equity go up when it doesn't generate a profit

There's a pattern I often see on companies balance sheets that I don't understand. The company will fail to generate a profit for the year, however their equity (assets - liabilities) increases. I'll ...
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Why did Prosus NV's PE ratio fall so sharply?

Consider the historical P/E ratio of Prosus N.V. ADR (OTC markets: PROSY): (source: https://ycharts.com/companies/PROSY/pe_ratio) (source: https://www.gurufocus.com/stock/PROSY/data/pe-ratio) ...
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1 answer
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What is the relationship between the market cap, share price, and cash in the market?

Let's say that a company entered a stock market selling 1000 shares $1K each in total $1M. What would need to happen in order to double the price of a share? Are both scenarios valid? 1st Additional $...
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Help me make sense of a take over bid with a 24% price premium

Bike company Accell Group today rose almost 25% (from ~E46 to ~E57) due to news of a take over bid coming out (offering E58). So far this seems like excellent news. However if you have a look at how ...
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2 answers
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What does overvalued stock do when a company goes out of business?

So what does overvalued stock do? My assumption is that if a company decides to close its shop tomorrow, then it would give us less money compared to what actually overvalued stock is representing. ...
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1 answer
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Buffett believes Bitcoin has no value and no future. Isn't it the same with stocks? [duplicate]

Just listened to Warren Buffett's thoughts on Bitcoin and he claims that Bitcoin is a non-producing asset which has no value. Buffet also points out that it is just the hope that others will be ...
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1 answer
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What is the "Stock/Equity Ratio"?

I'm reading the Intelligent Investor and I found this: Stock/Equity Ratio. This is the ratio of the market price of the junior stock issues* to the total face amount of the debt, or the debt plus ...
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2 answers
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Where does the formula for terminal value come from?

I am a beginner investor and I had this doubt in DCF models of valuation. Where does the formula for terminal value even come from? Like I have seen this video: https://www.youtube.com/watch?v=...
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Stock Analysis Equation Questions

I am a newer value investor and I am trying to slowly learn. I came across these equations and I am not able to find for sure online or in the books I have available what these abbreviations/acronyms ...
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Why should investors consider the "intrinsic value" of a company paying no dividends? [duplicate]

Why should a value investor consider the "intrisic" value of a company paying no dividends, if its stock price is fully determined by the perceived value? Theoretically, it could be possible ...
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Intrinsic value of a stock which pays out dividend

I want to find the intrinsic value of a stock which pays out dividend but not a significant amount. In particular, is there a way to incorporate the dividend payout in the discounted cash flow ...
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1 answer
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Will Didi make a profit from listing and delisting on the New York Stock Exchange?

You can find the news on all the media. Didi is planning to delist from the New York Stock Exchange after only six months. It floated shares for a value about 4 billions dollars last June. If they buy ...
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What is the significance of the valuation ratio EV/EBIDTA for investors?

I am new to stock market. I have a really basic doubt. Hope someone can solve it here I recently came across a valuation ratio which is EV/EBIDTA. Lets say there are two companies A and B. A wants to ...
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Confusion on what goes into Book Value

I've been reading a bit and come upon a bunch of conflicting accounts of what all goes into Book Value. What I was originally taught was that it's total net assets less intangible assets. However, ...
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15 votes
5 answers
8k views

Does the stock price drop if one of the largest shareholders of the company sells all their shares?

I don't know if it makes sense, I'm just wondering about its logic. For instance, Elon Musk has a huge amount of Tesla shares and right now he is selling his shares like a madman. Does the Tesla stock ...
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0 votes
2 answers
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Does buying stock have time duration that automatically sell after the period end? If not, how are people losing to stock? [duplicate]

I'm totally new to the stock market. I don't understand how some people do not win with stocks. If you decide to sell your stock whenever you want to, then why can't you wait for long period of time (...
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1 answer
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How do early-stage share prices of companies going public via SPAC change?

I currently have a number of series C, non-voting shares (< 1000) in a company that would go public via SPAC on this Monday. Since the price of each unit of SPAC is always price at $10 per unit for ...
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0 votes
1 answer
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How to evaluate an index? (other than PE based approach)

I am looking to invest in passive funds. In India there are least 5 popular indexes (Nifty 50, Nifty Next 50, Nifty MidCap 50, Nifty MidCap 100, etc.,). I am trying to find the most undervalued index ...
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Uncertain which data to use from AMC's 10-Q to calculate various types of profit margin

I've spent some time googling, and am still confused about which numbers from AMC's 2021 Q2 10-Q I should use to calculate the gross profit margin, operating profit margin, and profit margin. In ...
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-2 votes
2 answers
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What are the reasons behind the index going higher and higher every year? [closed]

The following is the chart for NASDAQ from the year 1981 to 2021. The chart shows: Index went so higher in 2000 to 5000 points Bottomed in 2002 to 1250 Went up and bottomed in 2008 to 1400 The Market ...
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0 votes
1 answer
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What does a negative terminal growth rate mean?

Say I truly believe in efficient markets (prices reflect all available information to investors). Under this condition, say I figured that a company has a growth rate that is negative perpetually. ...
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0 votes
1 answer
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Last stock trades in after hours sessions of a single share that causes huge movement in price

When I sometimes scan down after hours price changes, I notice tickers where there is a single last transaction that has a huge effect on the AH price. This is not an anomaly. I see it everyday on a ...
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1 vote
1 answer
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Where can I obtain research reports [closed]

As EU citizen interested in investing in US stocks, I'm interested in reading some local research about US companies from US banks/brokers. Where can I find such research reports? Do I have to pay or ...
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0 votes
1 answer
149 views

Finding the share price of a company couple years from now using the dividend discount model (practice)

A company is growing at a constant rate of 8%. Last week it paid a dividend of $3.00. If the required rate of return is 15%, what is the price of the share three years from now? My initial thought was ...
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CAPE inflation adjustment

How does the CAPE calculation take into account inflation? I thought that previous years earnings were discounted by prior year's inflation into today's money and then averaged. If that were the case ...
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1 vote
2 answers
154 views

How does Best Buy thrive with competition from Amazon? [closed]

Looking at best buy stock recently and it is near all time high, I personally don't go but I'm wondering how is it that they are doing so well when companies like Toys r us goes bankrupt?
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Is deal value equal to the enterprise value?

If a buyers pays $1.55 per share to get 6,480,000 shares of the target company such that the total outstanding shares of the target is 12,180,265. So deal value is $1.55 x 6,480,000 = $10.044M, but is ...
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3 votes
1 answer
77 views

Do convertible preferred shares increase common equity when converted?

Do convertible preferred shares increase common equity (increase the ratio of common equity to preferred equity) when converted? For example there $4m in shareholders equity and there are 4 shares, 2 ...
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1 vote
1 answer
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Is book value in BVPS really just shareholders equity?

So shareholders equity is total assets - total liabilities while book value is tangible assets - total liabilities. But apparently book value in practice could also just be total assets - total ...
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Arriving at true price of Robinhood stock as of IPO

This is how I am reading the Robinhood S-1 filing. The company is entirely divided into a total of 60,500,000 shares[1]. Of this, 5,500,000 shares are promised (right; not obligation) to the ...
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0 votes
1 answer
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How is BVPS calculated for common shares vs for preferred shares?

I've read a whole bunch of articles (eg: BVPS Definition) and all of them say BVPS is calculated using a formula similar to this: (total shareholder's equity - preferred equity) / total outstanding ...
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2 votes
2 answers
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Market Cap, NAV and finite resources

Gave a read through this question and I believe I understand the following: NAV is the sum of a companies assets; represents the value if the company was liquidated Market Cap is (shares outstanding ...
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-2 votes
3 answers
81 views

How does a company’s potential market cap affect share price?

As I understand it, market cap is the perceived worth of a company to the market. It’s derived from share price and shares outstanding, and I’m curious if it can be correlated to what share price a ...
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-4 votes
6 answers
431 views

Can an investor who perpetually holds stocks lose money?

I'm a little confused about stocks, since I'm a crypto holder. Thus, I'm used to seeing value on ideas that have no inherent value. Therefore, I want to draw some hypothetical situation with some ...
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10 votes
3 answers
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Company just got acquired. What does this mean for my common stock?

I own 200 common shares of a private company I worked for up until about 3 years ago. Today, I read in the news that they were acquired for a LOT of money but I don't know yet what the current stock ...
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0 votes
0 answers
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Why a large proportion of a bank’s balance sheet would fall into either Current Assset or Liabilities, while defining Working Captial?

In "Valuing Financial Service Firms" by Aswath Damodaran he wrote With working capital, we run into a different problem. If we define working capital as the difference between current ...
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0 votes
1 answer
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Treating debt of financial firm as Source of Capital, why small change in value of firm's asset value causes large change in Equity Value?

Let us treat debt as source of capital for Financial Service Firm and firm is operating on High Financial Leverage. Then how small changes in the value of the firm’s assets can translate into big ...
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0 votes
1 answer
109 views

Why do we discount cash flows with WACC instead of the opportunity cost?

First, a definition of WACC: The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of ...
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1 vote
1 answer
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Investment with Valuation and Credit Line with 10% Equity

Before I ask my question, I would like to tell that I am not from a Business background and therefore this might sound like a stupid question to most. Recently, I watched a film based on Steve Jobs ...
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3 votes
1 answer
60 views

Stock Offering Pricing

All- Quick general question about the pricing of secondary offerings: I understand that a dilutive offering decreases earnings / share, which is why it often leads to selling pressure. I’m wondering ...
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14 votes
7 answers
2k views

Why is there a distinction between growth and value investing, when growth is part of value?

I regularly come across articles about "growth vs value investing", "growth stocks beat value stocks", etc. Why is there a distinction between growth investing and value investing ...
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0 votes
0 answers
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How prices in stock market changes in accordance with demand and supply [duplicate]

Let's assume there is a listed company x. Currently it has 100 shares issued to trade in free float market. Current price of stock is let say 10. Now please let me know if I purchase one share of ...
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1 vote
1 answer
151 views

Net Asset Value for Shares in Startup

Assume a situation where an employee of a privately-held startup exercises a share option and receives 1 share and decides to leave. Per the option agreement the company has an 'option' to purchase ...
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1 vote
6 answers
323 views

Why does a stock trade for more than the share’s intrinsic value?

In a very basic sense, stock is purchased for the ownership of a company. Its price grows on the market following supply and demand, and as such the price of a single share may rise as the value of a ...
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0 votes
3 answers
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Are there any legal restrictions on "artificially" changing the price of a stock?

I understand that stock prices change partly based on supply and demand. In theory, could you convince a large group of people to buy a large portion of the stock so that the price would "...
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