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Questions tagged [stock-valuation]

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

182
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13answers
45k views

Why would a company care about the price of its own shares in the stock market?

After a company has issues shares, why should it care if the value of the shares go up and down? Since the shares are now being traded among the public, if the value goes up or down, that is strictly ...
155
votes
21answers
53k views

If a stock doesn't pay dividends, then why is the stock worth anything?

I read somewhere that companies are not required to pay dividends to shareholders (this is correct, yes?). If so, then if company A never pays dividends to its shareholders, then what is the point ...
14
votes
4answers
2k views

Why would I want a diversified portfolio, versus throwing my investments into an index fund?

Index funds are well-known to give the best long-term investment. However, most financial planners recommend having a diversified portfolio, including components such as bonds and foreign markets. I ...
1
vote
3answers
500 views

Can a wealthy investor invest in or make a deal with a company before it goes public / IPO?

Can a wealthy investor invest his money in any company before it goes public / IPO? I am referring to a recent Goldman Sachs and Facebook deal worth $450 Million at a valuation of $50 Billion dollars. ...
18
votes
6answers
1k views

How to evaluate stocks? e.g. Whether some stock is cheap or expensive?

What kind of information do you obtain before buying (or selling) a stock? I know the PE ratio is very important, but not the only thing. Are there any rules of thumb to determine whether some stock ...
16
votes
5answers
32k views

Historical stock prices: Where to find free / low cost data for offline analysis? [closed]

I am looking for a free way to get a large amount of data on the prices of stocks. I am not a trader or anything like that so it wouldn't be worth it to pay for a service to give me stock prices. I ...
37
votes
9answers
45k views

If stock price drops by the amount of dividend paid, what is the use of a dividend

I have heard that some people buy stocks based on how much dividend they pay, because dividend is considered 'income'. But if I buy a stock for 100$ and it pays a $1 dividend, the stock would also ...
17
votes
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 ...
5
votes
1answer
442 views

Why do passive ETFs require so much trading (and incur costs)?

As far as I've understood, the idea of passive ETFs is to track an index. Typically, the index is a value-weighted stock market index, such as the S&P500. Now, if I'm not mistaken, tracking a ...
3
votes
5answers
22k 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 ...
9
votes
5answers
935 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?
6
votes
1answer
206 views

Can an ETF perform differently than its holdings?

A mutual fund is just a portfolio of stocks (or other assets) and hence the fund performs as well as its holdings [minus various fees]. However, an exchange traded fund (ETF) performs, like a stock, ...
5
votes
1answer
2k views

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

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 ...
6
votes
5answers
4k 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 ...
15
votes
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?
9
votes
2answers
1k 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 ...
4
votes
3answers
1k 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 ...
12
votes
4answers
3k 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 ...
8
votes
3answers
2k views

Where can I find S&P 500 P/E ratios? [closed]

Before, I used the price-to-earnings numbers from spreadsheets published on Standard and Poor's website: Current estimates: www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS Historical values: ...
7
votes
3answers
2k views

Where to find out conversion ratio between General Motors bonds and new GM stock?

I bought some General Motors bonds (ETF-traded under "XGM" symbol) when they were at depressed prices, before GM declared bankruptcy. GM is supposed to be having an IPO sometime in November, and ...
6
votes
5answers
638 views

How would I use Google Finance to find financial data about LinkedIn & its stock?

According to Google Finance here (at time of writing): LinkedIn has a price earning ratio of 2104.71 : 1. It also says it has a market capitalisation of 7.22 billion dollars. Using this question's ...
1
vote
1answer
260 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 ...