By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Icy TalesIcy Tales
  • Entertainment
    • Books
    • Games
    • Gaming
    • Movies
      • Bollywood Movies
      • Hollywood Movies
      • Music
  • Icy Tales Exclusive
  • Food For Thought
    • Humanity
    • Inspirational
    • Issues that Concern Us
    • Personality
    • Environment
  • Living Life
    • Lifestyle
    • Fashion
      • Beauty
      • Hair
      • Makeup & Skincare
    • Fitness
    • Food
    • Health
    • Life Hacks
  • Stories and Poems
  • Student’s Corner
Search
  • Contact
  • Complaint
  • Advertise
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Reading: 3 Stock Value Calculation Tips for Beginners
Share
Notification Show More
Latest News
Christmas
What to do on Christmas Day: 26 Fun Things You Must Try
World Festival
media
Why is Media Literacy Important: 5 Important Benefits of Media Literacy
Technology
Thought concept
Thought
Stories and Poems
Marriage
What are the 5 love languages in Marriage: Important Love Languages to Know
Take on Relationships
Time Management Tools
20 Best Time Management Tools to Increase Your Productivity
Lifestyle
Aa
Icy TalesIcy Tales
Aa
  • About Us
  • Advertise With Us
  • Icy Tales Writing Agency
  • Icy Tales Recruitment Help
  • Privacy Policy
  • Cookie Policy (CA)
  • Terms & conditions
  • Code of Ethics
Search
  • Entertainment
    • Books
    • Games
    • Gaming
    • Movies
  • Icy Tales Exclusive
  • Food For Thought
    • Humanity
    • Inspirational
    • Issues that Concern Us
    • Personality
    • Environment
  • Living Life
    • Lifestyle
    • Fashion
    • Fitness
    • Food
    • Health
    • Life Hacks
  • Stories and Poems
  • Student’s Corner
Follow US
  • Contact
  • Complaint
  • Advertise
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Icy Tales > Business > Investment > 3 Stock Value Calculation Tips for Beginners
BusinessInvestment

3 Stock Value Calculation Tips for Beginners

Icy Tales Team
Last updated: 2023/01/18 at 10:54 AM
Icy Tales Team Published January 18, 2023
Share
5 Min Read
Stock value.
Stock value. Source: Shutterstock
SHARE
As an affiliate-driven website, Icy Tales earns from qualifying purchases.

To successfully invest in the stock market, every trader must know how to evaluate the market price of shares and determine their respective stock values. The accuracy of those stock valuations has to be on point, which isn’t easy given how complicated the calculations can become. On that note, let’s quickly go through some of the pro tips that will help beginners improve the accuracy of their independent stock evaluations.

Contents
Find a Resource for the Data You Will NeedDon’t Treat the Different Stock Valuation Numbers as AlternativesLearn How to Calculate the Different Values

Find a Resource for the Data You Will Need

Stock value is calculated by comparing the share’s present market price with the company’s contemporary performance and estimated projections for the future. If the current price of a stock is below its stock value, it’s an undervalued stock with high investment potential. In case the stock value is found to be below the current price of a stock, you need to be cautious about investing in the overvalued stock.

As you can imagine, to create the comparative analytics and draw insights from them for proper stock valuation, every trader needs access to data and analytics tools. First of all, you will need a tool for comparing different stocks, their performances, as well as future projections.

Don’t Treat the Different Stock Valuation Numbers as Alternatives

There are primarily four different stock valuation methods or numbers that a trader should be able to utilize. However, you should not be treating them as alternative systems. Instead, treat the following as separate values that must all be taken into consideration (as and when applicable) while determining the final stock value of a company. 

  • Price-to-Earnings ratio (P/E): Ideal for estimating and comparing the projected future earnings of companies within the same sector.
  • Price/Earnings-to-Growth ratio (PEG): Ideal for estimating and comparing the projected future growth of businesses in the same sector.
  • Price-to-Book ratio (P/B): Recommended for estimating the actual asset value of a company.
  • Free Cash Flow (FCF) number: Recommended for estimating the value of a company, minus all expenses.

Learn How to Calculate the Different Values

Even beginners should know how to calculate the different values mentioned above, since you may often need them to determine the final stock value. Check the simplified explanations next to learn how.

P/E Ratio

  1. Find the company’s most recent earnings per share (EPS).
  2. Find the company’s latest stock price per share.
  3. Divide the stock price per share by the EPS to get its P/E ratio.

PEG Ratio

  1. Find the company’s P/E ratio first.
  2. Use your most trusted resource to determine the company’s projected growth rate in percentage.
  3. Divide the company’s P/E ratio by the projected percentage growth rate to get its PEG ratio.

P/B Ratio

  1. Find the latest stock price of the company.
  2. Find the total number of shares issued by the company at that time.
  3. Find the company’s total book value by subtracting their total liabilities from their total asset value.
  4. Divide the book value by the number of issued shares to get the company’s book value per share.
  5. Divide the price per share by the book value per share to get the company’s P/B ratio.

FCF Number

  1. Find the company’s operating cash flow (OCF).
  2. Find the company’s capital expenditures.
  3. Subtract the capital expenditure from the operating cash flow to get the company’s raw FCF number.

Use the free cash flow number to determine the exact profit margin that the company has right now. You will be able to calculate the profit earned from per dollar of revenue generated. Although the profit margin will likely be lower at higher revenue categories, there is no better way to determine the immediate performance and real market value of a stock.

What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Leave a comment Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Stay Connected

22.2k Followers Like
13k Followers Follow
11.6k Followers Pin
56.4k Followers Follow
334 Subscribers Subscribe

Latest News

Christmas
What to do on Christmas Day: 26 Fun Things You Must Try
World Festival March 31, 2023
media
Why is Media Literacy Important: 5 Important Benefits of Media Literacy
Technology March 31, 2023
Thought concept
Thought
Stories and Poems March 31, 2023
Marriage
What are the 5 love languages in Marriage: Important Love Languages to Know
Take on Relationships March 31, 2023
// @Icy Tales

A Property of Icy Media https://www.icymedia.ca

#1407, 3083 East Kent Ave N,Vancouver, V5S 4R2,

Canada

Whatsapp – +1-778-951-2734

Disclosure statement:

Every time you make a purchase from one of the products we talked about, we may earn a tiny bit of commission – at no cost to you! This doesn’t influence our decision-making; it just helps keep our small business alive!

  • About Us
  • Advertise With Us
  • Icy Tales Writing Agency
  • Icy Tales Recruitment Help
  • Privacy Policy
  • Cookie Policy (CA)
  • Terms & conditions
  • Code of Ethics
Follow US

© 2022 Icy Tales. All Rights Reserved.

  • About Us
  • Advertise With Us
  • Icy Tales Writing Agency
  • Icy Tales Recruitment Help
  • Privacy Policy
  • Cookie Policy (CA)
  • Terms & conditions
  • Code of Ethics

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Register Lost your password?