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Topic: Stock valuation


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In the News (Sun 11 Nov 18)

  
  Stock Valuation Methods
This form of valuation is based on historic ratios and statistics and aims to assign value to a stock based on measurable attributes.
Stock B is trading at a forward P/E of 30 and expected to grow at 25%.
The PEG ratio for Stock A is 75% (15/20) and for Stock B is 120% (30/25).
www.abcstockinvesting.com /stock-valuation.html   (2547 words)

  
 Stock valuation: Facts and details from Encyclopedia Topic   (Site not responding. Last check: 2007-10-26)
Market-based valuation is a form of stock valuation that refers to market indicators, also called "extrinsic" criteria (i.e., not related to economic fundamentals...
A stock image in finance is a stock valuation[Follow this hyperlink for a summary of this subject] coefficient.
Fundamental analysis is a stock valuation method that uses financial analysis to predict price movement (compare to technical analysis)....
www.absoluteastronomy.com /encyclopedia/s/st/stock_valuation.htm   (1107 words)

  
 Stock valuation - Wikipedia, the free encyclopedia
The most theoretically sound stock valuation method is called income valuation or the discounted cash flow (DCF) method, involves discounting the profits (dividends, earnings, or cash flows) the stock will bring to the stockholder in the foreseeable future, and a final value on disposition.
The P/E method is perhaps the most commonly used valuation method in the stock brokerage industry.
One of the behavioral valuation tools is the stock image, a coefficient that bridges the theoretical fair value and the market price.
en.wikipedia.org /wiki/Stock_valuation   (459 words)

  
 VALUATION OF CORPORATE STOCK
Moreover, the fact that the decedent's stock was valued by his estate for estate tax purposes at $0 when its book value was in excess of $200,000 raised a doubts as to the adequacy of the consideration involved.
Valuing the transferred interest is more complicated than simply dividing the total value of the corporation by the number of shares outstanding thereby producing a per share value which is then multiplied by the number of shares transferred.
Therefore, in seeking valuation discounts, the taxpayer should take care to support his or her argument with clear and cogent empirical data illustrating why the discounts should be granted in order to reduce total estate and gift tax liability.
vls.law.vill.edu /orgs/tax-law-compendium/Student/stock.htm   (10957 words)

  
 Stock Valuation and Predicting Stock Returns
By comparing the long-term returns likely to follow from stock purchases made at today’s stock valuation level with the long-term returns likely to follow from stock purchases made at a lower or higher valuation level, you can put together a stock purchase strategy likely to aid you in becoming a true buy-and-hold stock investor.
The calculator shows that the stock valuation level that applies at the time a purchase is made is an important factor in predicting stock returns obtained in 10 years, 20 years or 30 years.
Moreover, it is important to understand that, while changes in stock valuation affect long-term returns as a matter of "mathematical certainty" (those are the words of William Bernstein, author of The Four Pillars of Investing), predicting stock returns in the short-term (time-periods of less than 10 years) is extremely difficult, if not outright impossible.
www.passionsaving.com /stock-valuation.html   (1119 words)

  
 Constant Growth Stock Valuation   (Site not responding. Last check: 2007-10-26)
Stock Valuation is more difficult than Bond Valuation because stocks do not have a finite maturity and the future cash flows, i.e., dividends, are not specified.
A constant growth stock is a stock whose dividends are expected to grow at a constant rate in the forseeable future.
Find the stock price given that the current dividend is $2 per share, dividends are expected to grow at a rate of 6% in the forseeable future, and the required return is 12%.
nalu.hpu.edu /mlane/BusinessFinanceOnline/SV/CGStock.html   (288 words)

  
 Inflation-Induced Valuation Errors in the Stock Market (2004-30, 10/29/2004)   (Site not responding. Last check: 2007-10-26)
In particular, studies show that the Standard and Poor's (SandP) 500 stock index tends to be undervalued during periods of high expected inflation (such as the late 1970s and early 1980s) and overvalued during periods of low expected inflation (such as the late 1990s and early 2000s).
Given that stocks and bonds can be viewed as competing assets in a portfolio, investors may wish to compare the valuations of these two asset classes in some quantitative way.
This valuation technique is often referred to as the "Fed model," but it is important to note that the Federal Reserve neither uses nor endorses it.
www.frbsf.org /publications/economics/letter/2004/el2004-30.html   (1842 words)

  
 Valuations and Interest Rates
As this impressive new cyclical bull market in the American stock markets continues to relentlessly march higher, the crucial issue of general-stock valuations remains at the forefront of the perpetual debate between the bulls and bears.
First, if high stock valuations were “normal” and acceptable during low interest-rate periods, then the Fed in 1997 did not have to worry that soaring equity prices were feeding a historical speculative mania and bubble.
If valuations ever reached bubble levels, which they did, the Fed Model suggested that slashing interest rates would give stocks breathing room and in effect “justify” their very high valuations without the need for the usual ugly post-bubble bust period.
www.zealllc.com /2003/valuint.htm   (3370 words)

  
 Stock Valuation Formula (DCF) and Calculator / Graph
Stock valuation based on earnings starts out with one giant logical leap: you assume that each dollar of earnings per share of a company is really worth one actual dollar of income to you as a stockholder.
To find the value of a stock, you need to calculate all of these future earnings (out to infinity!), and then use your own desired rate of return as a discount rate to find their present value.
The infinite sum of these present values is the fair market value of the stock; or more accurately, it's the maximum price you should be willing to pay.
www.moneychimp.com /articles/finworks/fmvaluation.htm   (498 words)

  
 MTWorld.com - Stock Valuation
Ultimately, the value of a stock is determined by the forces of supply and demand.
Investors are willing to purchase a stock at a price that provides for a reasonable return on investment and that fairly compensates them for the risk of stock ownership.
Ultimately then, stock valuations are dependent on a host of different variables and subject to the collective whims of individual investors.
www.mtworld.com /money/StocksValuation.html   (750 words)

  
 Internet Stock Valuation and Future User Characteristics (Alertbox Jan. 1999)
Fidelity, Schwab, or Vanguard could easily build a financial newsletter site that would be much more valuable to users (because it would integrate with their accounts) and much more valuable to the company (because they would extract some of this value from the customers through the account relationship).
I am a firm believer in the value of the Internet and that Web-focused companies will beat legacy companies to a bloody pulp over the next ten years.
Some analysts were impressed by the 2 million "unique visitors" and the billion-dollar valuation translates into $500 per "unique" user, including the many ones who only looked at the home page once and then decided to use another financial site instead.
www.useit.com /alertbox/990117.html   (744 words)

  
 Path to Investing — Demystifying Stock Research with Sam Stovall: Stock Valuation   (Site not responding. Last check: 2007-10-26)
But when it comes to stock valuation, analysts are attempting to evaluate stocks you might buy today in terms of their future worth.
Because this is a more complicated question, and because the value of a stock depends on so many factors, there are several ways to evaluate a company, and an analyst report may use one or many.
Valuation is also where all those numbers and acronyms come in — the part of the report that many investors would rather skip.
www.pathtoinvesting.org /trips/research/valuation_011.htm   (201 words)

  
 Sibson: REGULATORY UPDATE: 280G Stock Option Valuation   (Site not responding. Last check: 2007-10-26)
Thus, the value of a stock option is not properly determined if the option is valued solely by reference to the spread at the time of the change in control.
The value may be redetermined if, during the 18-month period beginning on the change in control, there is a change in either the term of the option due to a termination of employment or the volatility of the stock.
The value of the acceleration is the amount by which the accelerated payment ($1,096,000) exceeds the present value, as of September 15, 2005 (the accelerated vesting date), of a payment of $1,096,000 on September 1, 2007 (the vesting date absent the acceleration).
www.imakenews.com /sibson/e_article000187021.cfm   (1957 words)

  
 Microsoft Financial Fraud Update   (Site not responding. Last check: 2007-10-26)
If 80 percent of its stock value or roughly $400 billion is the result of a pyramid scheme, one might also ask what kind of effect this could have on the retirement system.
If 80 percent of this value is the result of a pyramid scheme, based upon manipulating a breakdown in the accounting rules, that would imply a future loss of $1.1 billion to the teachers of California.
Stock options are an excellent benefit yet like all benefits they have a real cost that should be charged to earnings to maintain the integrity of our free market system.
www.billparish.com /msftfraudfacts.html   (5889 words)

  
 Value Investing Glossary Part 1 of 2
A multifaceted approach to value investing with stock valuation based on intrinsic value estimated from cash returns, appraised value of assets, and other facets of value.
Intrinsic value can be thought of as the discounted stream of net cash flows attributable to an investment asset, and these cash flows for common stocks are periodic dividends or free cash flows to common stock equity owners and the terminal price or liquidating dividend.
Style is a misnomer when applied to value investing which is not a fashion and is not mixed with other approaches to form a hybrid but rather is a pure long term permanent commitment to the method of valuation only.
www.numeraire.com /glossary.htm   (2173 words)

  
 Stock Valuation
A beginning point on stock valuation is to calculate the required rate of return of the stock that we are valuing.
The Value of a Stock is the present value of its expected dividends plus the present value of the expected share price at some point in the future.
The present value of the dividend is being taken using the required rate of return as the "i" in a present value formula.
www.markrosa.com /stock_valuation.htm   (846 words)

  
 Valuation for Stock Option Grants (Cheap Stock)
Equity valuations, sometimes referred to as "cheap stock" valuations, are often required to support the strike price of options issued to employees and corporate constituents.
Cheap Stock valuations often require the valuation of the entire subject enterprise with the subsequent allocation of value to the specific securities in the capital structure.
Houlihan Lokey utilizes rigorous and sophisticated methodologies as well as experience in evaluating the terms of numerous classes of preferred stock and convertible securities in order to properly allocate value to the class of stock for which the option is granted.
www.hlhz.com /main.asp?p=TECH_FINADV_CheapStock   (318 words)

  
 Stock valuation methods
We know that the stock market is heavily priced toward future earnings, but we don't know if it is looking out to infinity, or out over some shorter period of time.
valuation model, the stock market for a given week in 1985, was pricing anticipated earnings out to the year 2005, discounted by the 30 year Treasury bond rate that week.
According to the valuation model we've been discussing, at it's maximum overvaluation in mid 2000, the SandP 500 price level was in tune with a 20 year earnings growth rate of 11 percent, versus the historical 6.2 percent.
home.earthlink.net /~stock_valuation/stock_valuation_discussion.htm   (1630 words)

  
 Stock Valuation with Sense   (Site not responding. Last check: 2007-10-26)
FCFE Valuation: Intel Co. (The example was given on 4/17/1997 and the stocks had 2-1 split on 7/14/1997.
They are the most effective stock valuation models used by successful professionals and taught at business schools in the United States.
The value of a stock (a bond, a firm, real estate, or any assets) is the sum of the income (cash flow) you expect to get in each future year discounted at the discount rates for those years.
stocksense.com /valuation.html   (562 words)

  
 Employee Stock Option Valuation: New Source of Litigation Risk for Auditors
Therefore, the fair value of a stock option is the fair value to the employer, which is generally not the fair value to the employee because of the associated restriction.
A number of models that purport to measure the company value explicitly adopt the employee’s perspective by applying a discount to reflect various contractual restrictions such as “non-transferability” and “non-exercisability.” Nevertheless, an employee’s valuation influences the cost to the company, but only through the timing of exercise or forfeiture.
A major challenge for valuation professionals is how to develop an economically sound, statistically stable, and operationally feasible approach to derive the valuation input parameters, using a pool of cross-sectional and time-series company- and employee-specific data.
www.nysscpa.org /cpajournal/2004/804/perspectives/p13.htm   (1110 words)

  
 Keown, Financial Manangement, 9/e, MyPHLIP Chapter 8 -- Multiple Choice
What is the market value of a share of preferred stock paying an annual dividend of 8 percent of the $100 par value when investors require a 12 percent return?
A share of common stock currently sells for $50.00 per share, has an expected dividend to be paid at the end of the year of $2.50 per share, and an expected growth rate of 5 percent per year.
The appropriate discount rate for a stock of this risk level is 14 percent.
cwx.prenhall.com /bookbind/pubbooks/keown5/chapter8/multiple1/deluxe-content.html   (513 words)

  
 SSRN-A Valuation Study of Stock-Market Seasonality and Firm Size by Zhiwu Chen, Jan Jindra
Furthermore, the valuation dispersion (or, kurtosis)across stocks increases towards the year end and reverses direction after the turn of the year, suggesting increased movements in both the under-and-overvaluation directions.
Among size groups, small-cap stocks exhibit the sharpest decline in valuation from June to December and the highest rise from December to January.
Overall, large stocks enjoy the highest level of valuation uniformity and are the least subject to seasonal valuation variations.
papers.ssrn.com /sol3/papers.cfm?abstract_id=273191   (298 words)

  
 Common Stock Valuation
Hence, the value of a share of its stock must be established as the present value of that expected dividend stream.
Find the expected price of the stock at the end of the supernormal growth period, at which point it has become a normal, constant growth stock.
The price of the stock is the PV of dividends from year 1 to infinity at 8% growth.
zhm.8m.com /FIN/commonstock_valuation.htm   (937 words)

  
 The Educated Investor - Learning Center   (Site not responding. Last check: 2007-10-26)
It is written for the beginner and will help him or her identify types of stocks.
Stocks and The Business Cycle - Knowing how certain types of stocks react to changes in economic cycles can help you make some profitable investment decisions.
The benefits of stock ownership and the difference between preferred and common stock are also covered by this tutorial.
www.educatedinvestor.com /onlinetutorial/stocks.html   (370 words)

  
 The Fed Model And Stock Valuation: What It Does And Does Not Tell Us   (Site not responding. Last check: 2007-10-26)
When the stock market was reaching record new highs in 1999 and 2000, many stock valuation models began sounding the alarm - flagging what in hindsight proved to be an extremely overvalued stock market.
This dynamic may explain why the bulls have had an easier ride, since many asset allocation models are driven by Fed Model valuations or some variation of it, and that would indicate a shifting to stocks from bonds.
So stocks are still "cheap." But when we take a look at absolute value comparisons, such as the earnings yields of the SandP 500 relative to past levels, we get a very different story.
www.investopedia.com /articles/03/112703.asp   (1308 words)

  
 Amazon.com: Financial Valuation of Employee Stock Ownership Plan Shares: Books: Larry R. Cook   (Site not responding. Last check: 2007-10-26)
It is estimated that more than 20 million employees currently hold stock in their companies through a variety of benefit options, including employee stock ownership plans (ESOPs), broadly granted stock options, or 401(k) plans with heavy concentrations of employer stock.
As more companies offer these valuable opportunities to employees, it is important for business appraisers, accountants, pension actuaries, Employee Retirement Income Security Act (ERISA) lawyers, and business leaders to understand both the implications of such processes and the valuation of companies with employee stock ownership plans.
Although titled "Financial Valuation of Employee Stock Ownership Plan Shares," it includes good insight into the decisions that go into whether to form an ESOP and whether an ESOP is feasible for a given company.
www.amazon.com /exec/obidos/tg/detail/-/0471678473?v=glance   (1418 words)

  
 Wachowicz's Web World - Part II
A whole series of articles relating to common stock valuation from the folks at The Motley Fool.
Helps you estimate a fair price to pay for a stock based on three main things: the company's earnings, the rate at which those earnings are projected to grow, and the stock's volatility.
Stock research center -- real time quotes and news, live financial markets data, research tools to evaluate and track stocks of publicly held companies.
web.utk.edu /~jwachowi/part2.html   (1804 words)

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