How To Estimate The Stock? What Is The Valuation Of The Stock?

Method of absolute Valuation:

One is the discount pricing model of cash flow, the other is the B-S option pricing model (mainly applied to option pricing, warrant pricing, etc.).

The cash flow discount pricing model currently uses the most widely used DDM and DCF, and the most widely used DCF valuation model is the FCFE equity free cash flow model.

The role of absolute Valuation:

The price of a stock always fluctuates around the intrinsic value of the stock, and finds that the undervalued stock buys stocks when the price of the stock is much lower than the intrinsic value, and when the stock price returns to the intrinsic value or even higher than the intrinsic value, the stock is sold for profit.

Relative valuation

Joint valuation

The significance of stock valuation

To help investors find stocks that are seriously undervalued, buy up to gain profits and directly bring economic benefits; help investors to determine whether or not their stocks are overvalued or underestimated so as to make decisions to sell or continue to hold, so as to help investors lock in their earnings or firmly hold their determination to gain higher returns; and help investors to analyze the risk of stocks of interest.

The lower the index is, the less risk the stock will fall.

If the valuation index is less than 30% or the operation suggests that the "buy or buy" stock immediately, even if the fall is temporary, it helps investors to judge the safety and profitability of the stocks recommended by the institution or the investment advisory body, so as to make a reasonable investment proposal and help investors to find the biggest profit opportunities in the hot plate.

In general, the performance of stocks in hot spots is quite different. Some investors, though hot, are not very profitable.

Valuation helps investors find the best stocks and maximize returns in the hot spots; stock valuation is the prediction of the potential value of stocks.

The higher the valuation, the higher the potential value.

But this valuation is artificial. In other words, he can tell the truth or falsehood.

Therefore, the reference value of valuation is limited.

Stocks depend on themselves.

Learn from Buffett and invest in value.

The price of a stock always fluctuates around the intrinsic value of the stock, and finds that the undervalued stock buys stocks when the price of the stock is much lower than the intrinsic value, and when the stock price returns to the intrinsic value or even higher than the intrinsic value, the stock is sold for profit.

In the study of listed companies, we often hear the term "valuation", which is actually how to judge the value of a company and compare its current stock price with that of its current stock price, so as to find out whether the stock price deviates from the value and guide our investment.

DCF is a rigorous valuation method. It is an absolute pricing method. If you want to get the exact DCF value, you need to have a clear understanding of the future development of the company.

The process of obtaining DCF value is the process of judging the future development of a company.

So the process of DCF valuation is also important.

To accurately judge the future development of enterprises, it is relatively easy to judge mature and stable companies. In the expansion period, the uncertainty of the future development of enterprises is large, and it is difficult to accurately judge.

In addition, the DCF value itself is very sensitive to the change of parameters, which makes the variability of DCF value very large.

But in the process of obtaining the DCF value, it will reflect the researcher's judgement on the future development of the enterprise, and on this basis, suppose.

With the valuation process and result of DCF, if the assumption is changed later, the new valuation can be obtained by modifying the parameters.

Relative valuation

Relative valuation includes PE, PB, PEG, EV/EBITDA and other valuation methods.

The usual practice is to compare, one is to compare with the company's historical data, the two is to compare with the data of the same industry in China, to determine its location, and the three is to compare with the international, especially Hongkong and the United States, the data of key enterprises in the same industry.

P / E ratio PE (share price / EPS):PE is a simple and effective valuation method. Its core is the determination of E.

PE=p/e, that is, the ratio of price to earnings per share.

From an intuitive point of view, if the company's earnings per share in the next few years are constant, then the PE value represents the existence of a company's constant profit level.

This is a bit like the concept of payback in industrial investment, but it ignores the time value of capital.

In fact, it is almost impossible to maintain a constant e. The change of e often depends on the fluctuation cycle determined by macroeconomy and the life cycle of an enterprise.

Therefore, when the PE value is used, the determination of E is particularly important, and the PE value with different meanings is derived.

E has two aspects, one is the historical E and the other is the predicted e.

For historical e, you can use the time points of different e, you can use the moving average or the dynamic annual value, depending on what you want to express.

For the predicted e, the accuracy of prediction is particularly important. In the real market, the trend of E has a decisive impact on stock investment.

The market value PB (share price / net share) and the net assets yield ROE:PB &ROE are suitable for the extreme value judgement of cycle.

For stock investment, it is very important to predict e accurately. The trend of e often determines whether the stock price is uplink or downlink.

But how much is the share price going up or down? PB&ROE can give a way to judge the extreme value.

For example, for a company with a good history ROE, the PB value below 1 is likely to be underestimated in the case of business prospects.

If the company's profit outlook is more stable and does not show obvious growth characteristics, the PB value of the company is significantly higher than the highest PB value of the industry (company history), and the possibility of stock price hitting the top is relatively large.

The cycle mentioned here has three concepts: market fluctuation cycle, stock price change cycle and cyclical industry change cycle.