How to value a stock?

Discussion in 'Stocks' started by jrlvnv, Sep 27, 2007.

  1. jrlvnv


    Was wondering if a few people can point me in the right direction in trying to determine how to find out what a stock is really worth?

    Any help you guys can give would be great. Thanks
  2. n00b just google it
  3. You do realize this is not a trivial question?

    For starters learn about P/E ratios, what they are, how they are derived and WHY they are important. Then take it from there.

    At the end of the day, assets with the same riskiness and growth potential should end up yielding the same.

    I allocated 1 minute to this post, time's up.
  4. mokwit


    Discounted value of the casflows accruing to the investor. Correct in theory, near meaningless in practice. NB P/E is a shorthand of this.
  5. Anything is worth whatever someone is willing and able to pay me for it.
  6. The quickest way to determine a stocks's worth is to buy some.
  7. Question is not clear. Worth to whom? A Private equity company will evaluate an investment different than 100 Million individual market participants (=the stock market) or a competitor (i.e. Yahoo might only be worth $20 a share to us mortals but it might be worth $40 a share to Microsoft).

    Just like in fine art, value lies in the eye of the beholder.
  8. gbos


  9. Not an investment expert myself, but deep value investors look to buy shares between 50% and 100% of bookvalue.
    Easier in a bear market one would think
  10. A stock that pays no dividends is worthless paper in reality but the demand for that paper is what gives it some value which is impossible to determine with any accuracy.

    Do not worry about trying to deterimine what a stock is really worth, better to determine if the company has any "value" and if you can buy the stock (assuming bullihs) and eventually sell it at a higher price.

    If Wall Street can come up with 10 different valuations for a stock which are all over the place, then we can use the utility.

    What is more important is RELATIVE value. Using things like P/E, P/S, P/CF you can get a sense of a firm's relative value to the market, its sector and industry and other competitors. Closest you are going to get for valuing the stock of a public company (i.e. not a takeover type of analysis).
    #10     Sep 27, 2007