Intrinsic Value Formula: Your Thoughts!

[white_goodman]

use it as a rough guide, dont get married to the formula though

 

[burglar]

use it as a rough guide, dont get married to the formula though

Hi white_goodman,

Trying to get my head around this one.
Trading around 14 times book value,
it's in the Montgomery fund as an A1 company.

So it is a good company, but at today's price, it is not cheap!

 

[McLovin]

I really don't know all that much about P&D ... I generally avoid!

P&D is a form of scam, which is why I questioned whether MF is actually doing that.

Trying to get my head around this one.
Trading around 14 times book value,
it's in the Montgomery fund as an A1 company.

So it is a good company, but at today's price, it is not cheap!

I wouldn't take that A1 rubbish as worth much. It's well documented on here companies that have been called "A1" then a couple of weeks later announce a profit downgrade. He will also announce at the time of the downgrade that his fund sold out of it months ago, it's happened over and over.

 

[galumay]

I am using a modified IV formula and one question I have is how to deal with dividends that are declared but not included in the Annual report, ie they are paid after 30th June.

My inclination is that if I include them in the calculation as dividends paid, then I will have to adjust the NPAT to reflect it. Does that seem right?

 

[burglar]

I am using a modified IV formula and one question I have is how to deal with dividends that are declared but not included in the Annual report, ie they are paid after 30th June.

My inclination is that if I include them in the calculation as dividends paid, then I will have to adjust the NPAT to reflect it. Does that seem right?

The latest dividend will be in the next annual report
along with updated NPAT and entire updated balance sheet!

Why do you wish to do the accountants job for him?
He gets paid plenty to do it on your behalf!

 

[kirtdog]

Hey guys,

I am trying to learn how to understand the values of shares. The very simple formula I have been using is total assets - total liabilities and then divide by the total number of shares. After doing this, I know there needs to be a multiplier based on the future prospects of the share, I know it doesn't reflect the SP but I think a high result is a good indicator that a good company is at a good price.
Please scrutinise this method, I am against charting as I attempted to do it and did no good! I have since listened to Roger Montgomery and think he makes a lot of sense..

 

[VSntchr]

Hey guys,

I am trying to learn how to understand the values of shares. The very simple formula I have been using is total assets - total liabilities and then divide by the total number of shares. After doing this, I know there needs to be a multiplier based on the future prospects of the share, I know it doesn't reflect the SP but I think a high result is a good indicator that a good company is at a good price.
Please scrutinise this method, I am against charting as I attempted to do it and did no good! I have since listened to Roger Montgomery and think he makes a lot of sense..

As Im sure you already understand a decent method needs to be more comprehensive than what you have described. Do some reading about npv (net present value), dcf (discounted cash flow)...and also try to focus more on the earning power of assets in place rather than a multiple of equity.
That is just my opinion...I'm sure alot of people have success with relative valuation - you just need to know HOW to use it..I.e what multiple to use based on competitors, sector etc.
sent from my phone so hope I don't appear abrupt!

 

[burglar]

... I have since listened to Roger Montgomery and think he makes a lot of sense..

He deliberately "makes a lot of sense".
It's how he gets to play the game with your money.

 

[Hodgie]

He deliberately "makes a lot of sense".
It's how he gets to play the game with your money.

I think alot of what he says is good stuff if someone was trying to learn about fundamentals and valuation but he only gives a little bit away, you need to pay to get more. Excellent salesperson. He is not silly.

Although im sure you could find most of his theories and thoughts on fundamentals in other literature for cheaper (if not free). Many others before him have discussed the logic that goes into the intrinsic value of a company.