In this article, we’ll learn the basic concept of fair value of companies. We’ll use a simple example of a bakery shop and try to estimate the fair value of its business. This article aims to help the readers get a clear visualization of the fair value estimation of stocks/businesses. After reading this article, the…
It’s an introduction to the Discounted Cash Flow (DCF) method as a tool for estimating the intrinsic value of stocks. Here is a free online DCF Calculator that can be used to estimate the intrinsic value of stocks. I feel DCF is a powerful technique that goes beyond stock price. It allows us to assess…
Deciphering the factors that influence company valuations is crucial for investors. Two key metrics that play a pivotal role in valuations are profitability and growth rate. We’ll understand how profitability and growth collectively affect the valuations of companies. We’ll use examples to get a hold of this correlation. Effect of Profitability (Example #1) Suppose there…
To understand if Redington’s Stock is undervalued or not, we must first look into its business. On the face of it, the company looks like a typical IT company, but it is not. Looking at its business model will tell us why a strong-looking company like Redington trades at a PE multiple of below ten…
Last week we did a fundamental analysis of a small-cap Indian IT sector company called Expleo Solutions. While doing the analysis, the thought of doing the analysis of an IT sector heavyweight came to mind. Infosys was intentionally picked between it and TCS as it looked better valued in terms of PE ratio. Moreover, while…
From an investor’s perspective, the utility of enterprise value lies in its ability to provide a comprehensive assessment of a company’s total value. By considering both equity and debt components, investors can gain a clearer understanding of the company’s financial structure and potential risks. This metric serves as a valuable tool for evaluating potential acquisitions….
While the discounted cash flow (DCF) model is a widely used method for valuing stocks. But it is not without limitations. Let’s examine the limitations of discounted cash flow (DCF) model. The limitations are with respect to present value calculation based on the future growth rate, cash flow estimation, and discount rate. The article will…
The focus on buying stocks at a discount has unparalleled benefits. It is especially true for people who are accumulating assets through the process of value investing. We tend to shop more during the SALE season. Recently I upgraded my phone to a Samsung S20 FE. It’s almost a 1.5-year-old model, but considering that it’s…
The mathematics side of Net Present Value estimation is complicated. Hence, we’ve implemented the whole algorithm in our stock screener. Nevertheless, this article explains my NPV algorithm in full detail.
With value investing comes a few synonymous terms like reading financial statements, intrinsic value, over and undervaluation, Benjamin Graham, Warren Buffett, long-term holding, etc.
Value investors keep looking at the signs of a market crash. Why? Because they make more money during a crash than in normal times. It will not be an overstatement that they crave for the index to crash. Why? Because it is the time to buy the best shares. The indices move in cycles. There…
There is no doubt that Nifty and Sensex are trading at their all-time highs. For the last two days, from 19-Oct’21, the market is showing signs of correction. In days, the Nifty50 has fallen by about 2.5%. So, our stock market is overvalued or undervalued? People are waiting for a sizeable correction of the market….
