Company (share) value

[Warren Buffet II]

Hi guys,

I would like to start this thread to get what people think is the correct value for any company. People normally say "I think ZFX is going up from $3 to $4" or " It is going down to $1.5". Well, here is the place, I would like to know what is your share valuation of any company you find interesting and it would be nice to have some comments to know what you think that should be the "correct" price.

I am posting mine in a moment.

Regards,

WBII

 

[chicken]

VALUATION OF SHARES AS i mentioned to you re BPC...SHARE VALUATION ??Its a subject where you will have to know all the facts, which we dont ,we only know what they say in the report..right you take TELSTRA..eg..is it $4 or $9..you dont know, and I bet most other people dont know..a share is the value what people are prepared to pay for it ,you mentioned ZFX could be $4 or as TECH/a said could be $15..because ZFX said they have an asset of $2.20..means nothing ,because there is no such thing as a correct valuation..its worth the money people are prepared to pay for..so..BPC 5 years ago was 3c...now its just about a $1...so where is your correct valuation...ZFX..will go higher than $4..if you cant see that then you have not understood the market...the market decides the price..if they say we are worth 1c...but the market pays 10c then the market valued the shares of what they are worth...there is not such a thing as a correct valuatin..have you understood that, if not talk to your broker he will explain it to you

 

[tech/a]

Personally I have no idea how to assertain value of a company and by the results of experts in the past that i have followed all I see from them is at best an intelligent guess.

When I bought CTX at $3.60 and sold at $8.10 there was no way that Id have thought it would trade at $13 plus but it is.

How can anyone value a share today at 4 X its value in 18 mths?

Why worry anyway just ride it until investors stop buying and they determine price.That way it doens matter what they value it before the fact!

 

[chicken]

Tech/a...my theory is ,the market determins the price..valuation ,what is that ? THE MARKET SETS THE PRICE>>Valuation or correct price is NOT relevant..TECH/a..you are so right of what you posted that w.buffet 2 does not have a clue should speak to a broker he might explain to him..that like microsoft which listed for $3..now sells at because of splits etc for $600 equivalent..and one does not know ..what the market will pay..its just a ???

 

[stockGURU]

Tech/a...my theory is ,the market determins the price..valuation ,what is that ? THE MARKET SETS THE PRICE>>Valuation or correct price is NOT relevant..TECH/a..you are so right of what you posted that w.buffet 2 does not have a clue should speak to a broker he might explain to him..that like microsoft which listed for $3..now sells at because of splits etc for $600 equivalent..and one does not know ..what the market will pay..its just a ???

The market measures sentiment, it doesn't reflect the real value of anything.

A stock's share price (well, market cap. to be more accurate) is simply its perceived value.

 

[tech/a]

Very very true S/G but that is what its traded at----- be it value or not.

Price is what we are trading is it not?
Price will determine profit or loss will it not?

Why does it matter what the REAL value of a company is---it will rarely be reflected in price---hmm perhaps if delisted.

Why does it matter as a necessity to be determined?

This is just my veiw I dont think W/B should be flamed because he asked the question!!Its a valid one and one none of us have been able to answer.

 

[Joe Blow]

w.buffet 2 does not have a clue should speak to a broker he might explain to him..

Chicken,

Was that remark really necessary?

Remember, be nice!

 

[sarah]

value is anything does not go down or becomes insolvent.

 

[doctorj]

I believe the question is valid. Sure the market determines the price and there is no absolute price for any given company, but valuations are relevent because they provide the fundamentally inclined among us to work out whether a company is undervalued.

For instance, a particular company might be valued through the NPV of its cash flows minus its expenses divided by the number of shares on issue. This provides a starting point for working out what a company is worth, it also can be used to evaluate the effect of new projects on the share price.

 

[Jay-684]

I cannot comment on how to determine the value of a company, and the relevant level of its share price. However, I thought this definition of market value might help some people

"the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion"

some people above have said that a particular companies share price is not only represented by the value of the company itself, but by the relative value the prospective buyer see's in the share. eg if the 'market value' for share X is $2, however a buyer believes due to hype and speculation that the price will rise to $3, then that buyer will be willing to pay above market value (above $2) for that stock. The sale of those shares would not represent the true market value.


if anyone wishes to comment please do (including any negative comments). My opinion is coming purely from a property prospective, and what the property market definition of market value is, so I'm wrong, feel free to put me in my place!

 

[Warren Buffet II]

Hi guys,

What I mean for correct price is something like this:

Eg:

BHP Current Price : $18.60
Broker valuation : $7.01

So, are you willing to pay $18.60 for this company? or are you going to wait until is down to $17 or you think it is going up to $20 so we will buy for any price from $18.60 to around $20?

It is a simple question, no much drama needed here, I am just after some kind of what people think about any particular company based on the current price.

I'll give you one my thoughts:

NWS Current Price : $21.71
I'll buy it if it goes down under $21. Why? because I think the Australian funds are going to be selling it before the 18th March and I think under $21 is a cheap price. So, this is what I am after, price why, reason..

If anyone wants to shares some thoughts you are more than welcome.

WBII

 

[brerwallabi]

Warren, i dont know if i can ever figure out the correct value of a company. but i do know that tomorrow i might value a company at possibly $5.00 but two days i may revalue at $4.70 thats how i trade and make money, if you are trying to figure out and it seems that way what the value will be in 2, 5 10 years time good luck so much can happen between now and then, i would be more focussed on what the value will be tomorrow.

 

[Warren Buffet II]

Warren, i dont know if i can ever figure out the correct value of a company. but i do know that tomorrow i might value a company at possibly $5.00 but two days i may revalue at $4.70 thats how i trade and make money, if you are trying to figure out and it seems that way what the value will be in 2, 5 10 years time good luck so much can happen between now and then, i would be more focussed on what the value will be tomorrow.

Hi brerwallabi,

Fair comment, I am not a day to day trader so I trade my stocks in advanced. So I do my research set a price and follow the company to see how it is behaving (changing buying price if needed) until I get what I want.

It is not 2,5,10 years it could be tomorrow if I can get for example TLS for $5.00 I'll buy it tomorrow.

WBII

 

[stockGURU]

Hi brerwallabi,

Fair comment, I am not a day to day trader so I trade my stocks in advanced. So I do my research set a price and follow the company to see how it is behaving (changing buying price if needed) until I get what I want.

It is not 2,5,10 years it could be tomorrow if I can get for example TLS for $5.00 I'll buy it tomorrow.

WBII

Warren,

I think one of the first steps in trying to figure out whether a company is undervalued is to fully understand the industry that business is in, that businesses place in it, their products and the quality of their products or services, their markets and their potential for growth.

Then, of course, there is earnings.

Whatever way you look at it, there is still a lot of speculation, extrapolation and guesswork involved.

All I can say is that I understand why people specialise in sectors... sometimes it seems there is just too much information and data to wade through. Spreading yourself too thin can work against you.

Fundamental analysis takes a lot of time to do properly.

 

[Warren Buffet II]

Warren,

I think one of the first steps in trying to figure out whether a company is undervalued is to fully understand the industry that business is in, that businesses place in it, their products and the quality of their products or services, their markets and their potential for growth.

Then, of course, there is earnings.

Whatever way you look at it, there is still a lot of speculation, extrapolation and guesswork involved.

All I can say is that I understand why people specialise in sectors... sometimes it seems there is just too much information and data to wade through. Spreading yourself too thin can work against you.

Fundamental analysis takes a lot of time to do properly.

stockGURU,

Completely agree. That is why I can set a buying price, if I do not do it I am just speculating. I put my money where I know I can get some profit and not only because I "Think" or seems to be going up.

WBII

 

[brerwallabi]

To be honest i am really not interested in the true value of a company and in some cases it is totally immaterial if the share is a bank,oiler,metal or retail etc, if a share is $5.0 and some broker puts it at $6.25 based on its book value to its NTA, I would certainly take the comment on board and depending on funds available and other oportunities around i would follow closely and if the thing looks like going for a run maybe I would look to enter, I would then also be looking to exit. Value can change very suddenly, opportunities come along every day, my money has to work for me continually, my trading is shortterm, yes and i do watch charts very closely, may be you may need to gain some understanding of charts and then you may be able to spot some value not neccessarily TLS @ $5.00 but a stock coming of a support line and heading north again now thats value, this is a tricky business and you could do your dough. Good luck hope you find your value have sometimes.

 

[chicken]

WARREN BUFFET 2 you said you trade your stock in advance...well that means you are a shortseller...watch yourself because in a bull market you loose your pants...and your valuation are not correct what you assume of value is to me a questionmark but each to their own..but I see pitfalls in your module which sooner or later will brake you ,so buy and sell, but going short has ruined a lot of traders..believe me...the brokers want their dough

 

[chicken]

THINK ABOUT THIS....the market determins the price...not posters , as they cannot influence what happen from day to day...look at the resources..a 3c share goes to 30c...and their asset is 1c...so your argument or statement is of no foundation...the market decides what happends..and WHY...there is allways a reason...people know..like you said you buy TLS at $5...well we all like dreamers...its just not the way the market works and because you are not buying well who cares...because if you have not a billion $$$ you cant influence what happens in the market Mr Packer can because he has the equity to do so...so your thread on sharevalue..is just impossible to give a true answer because thats a holy grail which is impossible to answer because if everyone thought the way you seem to ,there would be no market...we all think differently...thats why the buyers think long and the sellers are short..you seem to be in the later group who thinks we should all give our stock away..no my friend thats not the way it works but we all make up our own way...thats why you have a market...THE MARKET DECIDES....BETTER BELIEVE THAT

 

[kooka1956]

The market decides what sort of premium it should give to different types of shares. At the moment most resources are traveling extremely well due to the Chinese economy, banks have had their run a while ago and capital increase has been minimal for the past year or two,and in the case of N.A.B. negative.
I would not discard N.T.A. however. This is the true value of a stock if they were to shut their doors tomorrow,and would be the only thing you would receive in a firesale. I disagree with tech/a when its mentioned 'WHY WORRY ANYWAY JUST RIDE IT UNTIL INVESTORS STOP BUYING'. If you had experienced the crash of 1987 you would be aware that this thought was in the minds of 1000,s of investors who lost over 40% of their portfolios in a single day.Their was no prior opportunity to jump off the bandwagon.
Therefore I consider N.T.A. to be the fundamental price of a stock,anything over that is the perceived FUTURE increase of that N.T.A. regards KOOKA

 

[Warren Buffet II]

Hi Guys,

Thank you all for all that expertise, I am pretty sure there are many guru investors here with may number of techniques and knowledge about how the market works, how I should invest, how charts works, how to read charts, how Mr x work, about how correct valuation does not work, how valuations are incorrect, if you are interested in those areas I will open another thread to follow those discussions without loosing the correct point here.

In this thread I am not interested in that stuff in this thread I am interested in knowing what are your company valuation at any point in time.

Just valuation thanks

I'll give you another example for those still loosing the main objective:

BHP : valuation = $20
Becase this and this

Another person can reply I think that is expensive because this and this... or is cheap because this and this....

Hopefully we get it rigth this time.

Regards,

WBII