Among other metrics, our stock screener stands out because of two important numbers, the overall score, and intrinsic value. The intrinsic value of stocks is estimated based on a few standard financial models like DCF and a few of my own algorithms and logic. But the overall score-rendering proved to be more complicated. Why? Because […]
If you’ve landed on this page, it means you’ve searched for quality companies to invest in for the long term. In this article, we learn how to shortlist such companies. We’ll know the process of finding such stocks on our own. There are seven golden steps that will help us find shares of quality companies available […]
Performing stocks analysis by comparison method is relative valuation. We can compare a company’s valuation multiples with its industry average or with its peers. This valuation approach is easy but there are limitations…
The mathematics side of Net Present Value estimation is complicated. Hence, we’ve implemented the whole algorithm in our stock screener. Nevertheless, this article explains my NPV algorithm in full detail.
P/E ratio in its basic form (trailing P/E) may not be as useful. But there can be multiple derivaties of it. P/E ratio seen through the lens of ‘earning yield’ or ‘PEG ratio’ gives good insights into price valuation. I personally love valuing high P/E stocks using the ‘forward P/E’ method.
The debt-Equity ratio (DE) is easy to calculate. But its interpretation is not as straightforward as we think. We generally assume that a DE ratio of 2 is acceptable. But for analysts, this number is too high. Let’s look at the DE ratio from an analyst’s perspective.
With value investing comes a few synonymous terms like reading financial statements, intrinsic value, over and undervaluation, Benjamin Graham, Warren Buffett, long-term holding, etc.
The invested capital is the total funds generated by the company by issuing equity and debt in the market. People who subscribe to equity are called shareholders, and the latter are bondholders or borrowers (like banks). The sum of funds raised through and bond is called invested capital. The return generated by the business on […]
Free cash flow (FCF) is more valuable than the net profit (PAT) of a company. We will see how. To understand it, we will use a hypothetical example and calculate the free cash flow for an individual. Suppose you won a prize in a car rally. The gift is payable in cash worth Rs.5,00,000. But […]
We’ve built an Excel-based tool that can analyze stocks. But how beginners can calculate the intrinsic value in excel on their own? In this article, I’ll discuss a procedure to do it. It is simple, and even beginners can practice it. There are limitations of estimating intrinsic value using this method. But experts say that using some valuation method is better than investing blindly […]
Talking about stocks, investing only in a financially healthy company is advisable. But it is easier said than done. Why? Because analyzing the financial health of a company is not easy for a novice? It is a thing that must be learned. In this article, we will try to do just that. Generally speaking, investors […]
A financially healthy company tries to maintain its solvency and liquidity at all times. Solvency is the ability to meet long-term debt obligations, and liquidity takes care of short-term debt obligations. What do we mean by debt obligations? It is the due amount payable against a loan. It consists of both the principal and interest portions of […]