Hi friends
When you look for data on EPS,ROE,Earnings growth rate etc,you dont find much data or info on net.
some companies do research and sell this info.
Some of these are capitalmarket and equitymaster etc.
One of the turtles uses just two things- EPS and cash flow
If a company has stable earnings and if it has reasonable good cash flow(cash in hand)-then it is good one.
There is a factor called market fancy-people like a company or dont like it-for unknown reasons.
If you like estimate fair price of a stock to buy, then you can try this site
and obtain a method.
http://www.valuespreadsheet.com/how-to-value-stocks-ebook
1 calculate 5 year price target for google stock
AVPE = Average p/e for past 10 years = 21.6
EPS-TTM = 31.92
EGR = EXPECTED GROWTH RATE for next 5 years =13.44% as per analysts estimates
error in estimate likely =25%(benjamin graham) means 0.75 is realistic value estimate
21.6 31.92 (13.44 multiply by 0.75)=10.08
get now
21.6 31.92 10.08
Price target for 5 years = 31.92 * (1+0.1008)*power 5 * 21.6
= 1114.45
Now this is value after 5 years.
BUT we need value AS OF Now
here we need to account for discount(9% inflation etc )
INTRINSIC VALUE OF GOOGLE STOCK NOW
= 1114.45/(1.09)POWER 5
= 724.32
BUT AT THE TIME OF CALCULATION, GOOGLE TRADING AT 738.
ESTIMATED INSTRINSIC PRICE =724 CURRENT PRICE IS 738,HIGHER THAN ESTIMATED PRICE.
THIS MEANS CURRENTLY GOOGLE IS FAIRLY PRICED. NO NEED TO BUY
WE ARE LOOKING FOR TIME WHEN GOOGLE PRICE BECOMES REASONABLY LESS THAN 724 WE BUY ONLY THEN
What price should you buy if you want to earn 20% per year?
your maximum discounted buy price = five price target/(1.20)power 5
Best Buy price = 1114.45/1.2power 5 = 447.87
(INCIDENTALLY 447 IS EQUAL TO 61.8% OF 724,OUR ESTIMATED INTRINSIC VALUE)
========================================================================================
SUMMARY
SO YOU KNOW NOW
YOU NEED
AVPE=AVERAGE P/E VALUE FOR PAST 10 YEARS
EPS-TTM VALUE
EGR ESTIMATED GROWTH RATE FOR NEXT 5 YEARS
APPLY 25% ERROR IN ESTIMATION
CALCULATE
PRICE TARGET FOR 5 YEARS = EPS*((1+(EGR*0.75)/100)POWER 5*AVPE
CURRENT INTRINSIC VALUE = PRICE TARGET 5 YEARS/(1.09)POWER 5
BEST BUY PRICE = MAX BUY PRICE NOW = PRICE TARGET/(1.20)POWER 5
GOOGLE TRADING PRICE 738
GOOGLE INTRINSIC VALUE ESTIMATED =724
OBSERVATION
CURRENT PRICE IS ABOVE INTRINSIC VALUE
CURRENT PRICE IS NOT UNFAIR LOW OR MAX POSSIBLE SAFE BUYING PRICE
ACTION
DONT BUY NOW
WAIT TILL PRICE COMES TO MAX SAFE BUY PRICE OF 447 OR LESS
GOOGLE MAX BUY PRICE = 447
=============================================================================================
Request
If anybody has interest,he can calculate
maximum safe buy price for L&T,SBIN,INFOSYS ETC
AND POST HERE with details
regards
ford
When you look for data on EPS,ROE,Earnings growth rate etc,you dont find much data or info on net.
some companies do research and sell this info.
Some of these are capitalmarket and equitymaster etc.
One of the turtles uses just two things- EPS and cash flow
If a company has stable earnings and if it has reasonable good cash flow(cash in hand)-then it is good one.
There is a factor called market fancy-people like a company or dont like it-for unknown reasons.
If you like estimate fair price of a stock to buy, then you can try this site
and obtain a method.
http://www.valuespreadsheet.com/how-to-value-stocks-ebook
1 calculate 5 year price target for google stock
AVPE = Average p/e for past 10 years = 21.6
EPS-TTM = 31.92
EGR = EXPECTED GROWTH RATE for next 5 years =13.44% as per analysts estimates
error in estimate likely =25%(benjamin graham) means 0.75 is realistic value estimate
21.6 31.92 (13.44 multiply by 0.75)=10.08
get now
21.6 31.92 10.08
Price target for 5 years = 31.92 * (1+0.1008)*power 5 * 21.6
= 1114.45
Now this is value after 5 years.
BUT we need value AS OF Now
here we need to account for discount(9% inflation etc )
INTRINSIC VALUE OF GOOGLE STOCK NOW
= 1114.45/(1.09)POWER 5
= 724.32
BUT AT THE TIME OF CALCULATION, GOOGLE TRADING AT 738.
ESTIMATED INSTRINSIC PRICE =724 CURRENT PRICE IS 738,HIGHER THAN ESTIMATED PRICE.
THIS MEANS CURRENTLY GOOGLE IS FAIRLY PRICED. NO NEED TO BUY
WE ARE LOOKING FOR TIME WHEN GOOGLE PRICE BECOMES REASONABLY LESS THAN 724 WE BUY ONLY THEN
What price should you buy if you want to earn 20% per year?
your maximum discounted buy price = five price target/(1.20)power 5
Best Buy price = 1114.45/1.2power 5 = 447.87
(INCIDENTALLY 447 IS EQUAL TO 61.8% OF 724,OUR ESTIMATED INTRINSIC VALUE)
========================================================================================
SUMMARY
SO YOU KNOW NOW
YOU NEED
AVPE=AVERAGE P/E VALUE FOR PAST 10 YEARS
EPS-TTM VALUE
EGR ESTIMATED GROWTH RATE FOR NEXT 5 YEARS
APPLY 25% ERROR IN ESTIMATION
CALCULATE
PRICE TARGET FOR 5 YEARS = EPS*((1+(EGR*0.75)/100)POWER 5*AVPE
CURRENT INTRINSIC VALUE = PRICE TARGET 5 YEARS/(1.09)POWER 5
BEST BUY PRICE = MAX BUY PRICE NOW = PRICE TARGET/(1.20)POWER 5
GOOGLE TRADING PRICE 738
GOOGLE INTRINSIC VALUE ESTIMATED =724
OBSERVATION
CURRENT PRICE IS ABOVE INTRINSIC VALUE
CURRENT PRICE IS NOT UNFAIR LOW OR MAX POSSIBLE SAFE BUYING PRICE
ACTION
DONT BUY NOW
WAIT TILL PRICE COMES TO MAX SAFE BUY PRICE OF 447 OR LESS
GOOGLE MAX BUY PRICE = 447
=============================================================================================
Request
If anybody has interest,he can calculate
maximum safe buy price for L&T,SBIN,INFOSYS ETC
AND POST HERE with details
regards
ford
