What are different stock valuation methods?

shares valuation methods represent a process that the investor uses to determine the value of individual shares. These methods provide a technical view of whether the investor can confirm its assumption of shares providing acceptable future return. Stock valuation methods usually focus on earnings, sales, own capital or growth. Each method focuses on a specific area so that the investor can test different aspects of each stock. Some methods also provide a company analysis behind shares that are often more important than looking at numbers. Each quarter will report profit per share for the previous three months. A simple way to calculate this number - although it is easily accessible on many investment websites - is the division of net income for the period by overall diluted shares. Investors often predict future earnings by this method to share the amount of possible profit growth per share shares using this method.

Income -based share valuation methods focus on a metric known as the price ratio. The ratio is divided by the company's market award for its revenue for the end of 12 months. Market capitalization represents outstanding diluted shares multiplied by the current price of shares plus the current long -term debt obligations. The division of this number income creates a number around 1.0; The numbers of less than 1.0 are usually considered to be hidden gems that may underestimate the stock markets. This provides a good opportunity to make money for stock growth.

The valuation of shares based on capital information is another common process used by investors. This method often focuses on the warehouse accounting value; The accounting value is usually the total assets reported by the company less intangible asset listed in the balance sheet. The division of this number with the overall dilute actions to the outstanding actions will provide investors a number known as the accounting value per share. Current AK pricesCii, which are below the accounting value, indicates that shares are actually sold for less than its actual value. The stock price should therefore be increased to the accounting value per share.

Growth stock valuation methods use historical rates provided by society for evaluation purposes. Some companies are considered stable by providing 1 to 2 percent every year. The yields are lower, but they are safe games during hard economic periods. Shares with high growth with an annual growth of 10 to 15 percent can be rewarding, but often have a greater risk with them. Once the company reaches the plateau on the market, the growth tends to align and become more stable, perhaps negative when more companies enter the market.