Return on equity (ROE) is a closely-watched number among knowledgeable investors. It is a strong measure of how well a company's management creates value for its shareholders. The number can be misleading, however, as it is vulnerable to measures that increase its value while also making the stock more risky. Without a way of breaking [...]
What is the Altman Z Score? The Altman Z-Score formula was originally developed by Edward Altman, an assistant professor at NYU (at the time). It was designed to predict the probability that a company would go bankrupt within two years using financial metrics that assess solvency, profitability, leverage, liquidity, and turnover. The focus of this [...]
The Beneish model is a mathematical model that uses financial ratios and eight variables to identify whether a company has manipulated its earnings. The Beneish M score was created by Professor Messod Beneish. In many ways, it is similar to the Altman Z score but optimized to detect earnings manipulation rather than bankruptcy. This is [...]
“Competitor” tab is aim to list and store a list of competitors for the stock that you are currently working at. You can save a list of up to 40 competitor / peer companies and the average of the financial ratios will be calculated for comparison. The average figures will also be used in peer [...]
You may have found a great company that you feel has outstanding potential but always end up getting stuck at what price you should purchase the company. Finding the value of a stock is a critical part of investing successfully. Valuing stocks is not hard, but it does require logic and practice. However, when trying [...]
Before we dive into each of the valuation models, we take a look at the “V – Dashboard” tab. The valuation dashboard tab serves as a summary for all the valuation method and also for the calculation of median fair value and its margin of safety. All the valuation method available in the analyzer is [...]
Valuing a Stock with the DCF Method Financial ratios and multiples – including metrics like price-earnings ratio and return on equity – provide a quick way for investors to determine the general value of a stock compared to other investments in the market. If you want to estimate the absolute value of a company, however, [...]
DCF valuation – The Pro & Cons DCF analysis is widely used in the investment communities. In fact, it is one of the most commonly used valuation method that you may see in analyst reports. As an investor, DCF valuation can be a handy tool that serves as a way to confirm the fair value [...]
“THE VALUE OF A SHARE DEPENDS ON ITS FUTURE DIVIDENDS” “THE VALUE OF A SHARE DEPENDS ON ITS FUTURE DIVIDENDS” The above passage is taken from the book “Stock Market Investment in Malaysia and Singapore” by Dr. Neoh Soon Kean of Dynaquest Sdn Bhd. It was published in year 1985. He had to mentioned it [...]
What Is Vitaliy Katsenelson’s Absolute PE Model About? Vitaliy Katsenelson’s Absolute PE Model is derived from his book Active Value Investing. In it, he lays out a simply framework as well as a valuation method which he calls the absolute PE model. We usually us PE ratio as a relative valuation by comparing it to [...]
