How do you evaluate a share price? Find a target price/over or under valued?

[DJG]

Hi Guys,

I don't post to much but try to read as much as I can.

If its already been asked, please direct me to the thread (had a quick search)

I was just wondering how do you all evaluate a share price/company prior to a purchase? IE - what methods or calculations/ratios do you always or mostly use and why?

Do you find your estimates to be pretty accurate?
What sort of formulas do you use to find out if a company is over or under valued in your mind, and why?

What puzzles me is how you can calculate numbers, get a result but still somehow give a share price estimate.
Obviously things like the PE work on average, ie below 15, above 15.

Very interested in everyone's comments, keen to learn more about evaluating a share price/if a stock is at a discount or premium

Thanks

 

[burglar]

... Very interested in everyone's comments, keen to learn more about evaluating a share price/if a stock is at a discount or premium

Thanks

Search for "Intrinsic Value" ... enjoy! :

 

[Garpal Gumnut]

Hi Guys,

I don't post to much but try to read as much as I can.

If its already been asked, please direct me to the thread (had a quick search)

I was just wondering how do you all evaluate a share price/company prior to a purchase? IE - what methods or calculations/ratios do you always or mostly use and why?

Do you find your estimates to be pretty accurate?
What sort of formulas do you use to find out if a company is over or under valued in your mind, and why?

What puzzles me is how you can calculate numbers, get a result but still somehow give a share price estimate.
Obviously things like the PE work on average, ie below 15, above 15.

Very interested in everyone's comments, keen to learn more about evaluating a share price/if a stock is at a discount or premium

Thanks

It is very good question and there is no good answer. I asked myself that question when I first invested in ASX stocks many years ago.

Someone, somewhere, trained a monkey many years ago to throw darts. He then placed a WSJ page with all the listed stocks on the board.

The monkey was allowed one throw per week.

The monkey's picks outdid the best fund managers that year.

Don't get too hung up on fundamental analysis beyond p/e ratio and dividends and in Australia whether they are franked, and to what percentage.

Good trading mate.

gg

 

[sydboy007]

I tend to focus on a decent 5%+ franked dividend yield, from a company with a good history of DPS growth.

It may take the market awhile to catch on, but I'm happy to buy these kind of shares on the cheap and hold for the long term.

Just a shame with the run up of the market late last year it's a tad difficult to find an undervalued share.