Share valuation methods

Valuation of shares can be done with different methods. We review different advanced methods of share valuation or fundamental analysis in the articles below. The articles contain details of calculations used in fundamental analyisis as well as the pros and cons.

Fundamental analysis is one of the stock value analysis methods, as is technical analysis and event-based analysis. Fundamental analysis uses historical and current figures about the company to value the company. With technical analysis you can interpret the current short term trend. Event-based (statistical) analysis tries to predict certain events on the stockprice.

Price/earnings growth

As an investor, you want to make a profit on your investments. The way to do this is to buy the right companies at the right time. And to sell them at the right time. To achieve this main goal, there are a lot of different valuation methods and indicators around. One of these indicators is the profit-to-earnings growth, or PEG, which is based on the price-to-earnings ratio.

Discount model part 4: Profit

This article about using the profits of a company for calculating the company value is the final part in this series. Part 1 discusses the general principles and calculation of the discount model. Part 2 and 3 explain the calculation of the company value with the discount model using the cash flow and dividend.

Discount model part 3: Dividends

In this part of the article series about the discount model, I will discuss the dividends discount model (or DDM). In previous articles in this series, the basis and calculation of the discount model and the cash flow discount model are described.

In this article, I write about the pros and cons of the use of the dividends when calculating the discount of shares of a company. Besides that, I also explain the specific principles and attention points for the dividends discount model. I will also discuss the origin of the discount models (not specific the dividends discount model) and the investors that use the discount model.

Discount model part 2: Cash flow

In part one of the discount model series, the different discount model types and the calculation of the discount model are discussed. Part two of the discount model article series is aimed at the cash flow discount model (or discounted cash flow model). In this article the reason why the cash flow is used in the discount model, what the different types of cash flows are and the shortcomings of the discounted cash flow models.

Discount model part 1: Basics

In the next four articles I will discuss the discount model and the various variances: the cashflow discount model, the dividend discount model and the profit discount model. In this article, the idea behind the discount model, the one and two stage discount model, and the calculation of the discount models are explained. In the following articles I will discuss each of the three variances.

Graham's number

Benjamin Graham was the mentor of Warren Buffett. Besides being the mentor of one of the worlds most successful investor, Benjamin Graham has had a number of interesting ideas and theories. One of these theories is the so-called Grahams number, which is determined by the net current asset value (NCAV). The purpose of Grahams number is to find undervalued shares.