Share Valuation method by antonym

rijayasooriya · 1 Share Valuation method by antonym Sun Jul 03, 2011 1:23 pm

rijayasooriya

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In a previous post 'Antonym' mentioned a formula used by him.

NAVPS+8*annualEPS.

I used this formula and it seems worthwhile.
I can understand the value of NAVPS and EPS to that formula.
But how u get that number 8?[is it 'Antonym Niyathaya(read in sinhala)...Just Joking]

Thanks for sharing with us.....!!!! Exclamation

Last edited by rijayasooriya on Sun Jul 03, 2011 1:51 pm; edited 3 times in total (Reason for editing : Title changed. to get attention of antonym)

Antonym · 2 Re: Share Valuation method by antonym Sun Jul 03, 2011 2:18 pm

Antonym

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The formula assumes that EPS will remain constant in real terms. To that extent, it is pessimistic.
My expected rate of return is 12.5% per year, which means the company should earn its money over 8 years (100/12.5).

Please note that formula is neither scientific nor fool-proof. I use it as a basis of elimination, not a basis of selection. Not all stocks that qualify are worth buying. But, in my opinion, stocks that do not qualify are probably not worth buying. (Sure, there may be exceptions!) Smile

rijayasooriya · 3 Re: Share Valuation method by antonym Sun Jul 03, 2011 2:46 pm

rijayasooriya

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Then there is some basis depending on our expected earning.
If we have higher expectations that number becomes less and share price come down.
Ex:-
NAVPS:50.........EPS:2
If expectation is 12.5%
50+8*2=66/=

If expectation is 20%
50+5*2=60/=

NAVPS and EPS includes the performance of company.
That number indicates clients expectations which is not included in any other formula.
This is actually a creative thing.
If we can improve this formula.....It is a great thing.

Last edited by rijayasooriya on Sun Jul 03, 2011 9:07 pm; edited 1 time in total (Reason for editing : calculation error)

Marketinvest · 4 Re: Share Valuation method by antonym Sun Jul 03, 2011 2:50 pm

Marketinvest

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In this market their is no greater point in share valuation. Most of them based on insider information

rijayasooriya · 5 Re: Share Valuation method by antonym Sun Jul 03, 2011 8:36 pm

rijayasooriya

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That is why above formula is important.
It contains investers psychology as a number.
I do not tell this formula is perfect one. But it considers investers psychology. That is an important factor.

kiri · 6 Re: Share Valuation method by antonym Sun Jul 03, 2011 8:55 pm

kiri

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rijayasooriya wrote:Then there is some basis depending on our expected earning.
If we have higher expectations that number becomes less and share price come down.
Ex:-
NAVPS:50.........EPS:2
If expectation is 12.5%
50+8*2=800/=

If expectation is 20%
50+5*2=500/=

NAVPS and EPS includes the performance of company.
That number indicates clients expectations which is not included in any other formula.
This is actually a creative thing.
If we can improve this formula.....It is a great thing.

@rijayasooriya
i have a doubt about this calculation. how did you get 800 from this 50+8*2=800/=. it should be 50+8*2=50+16=66 scratch

pls explain it.thank you.

rijayasooriya · 7 Re: Share Valuation method by antonym Sun Jul 03, 2011 9:05 pm

rijayasooriya

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kiri wrote:

rijayasooriya wrote:Then there is some basis depending on our expected earning.
If we have higher expectations that number becomes less and share price come down.
Ex:-
NAVPS:50.........EPS:2
If expectation is 12.5%
50+8*2=800/=

If expectation is 20%
50+5*2=500/=

NAVPS and EPS includes the performance of company.
That number indicates clients expectations which is not included in any other formula.
This is actually a creative thing.
If we can improve this formula.....It is a great thing.

@rijayasooriya
i have a doubt about this calculation. how did you get 800 from this 50+8*2=800/=. it should be 50+8*2=50+16=66 pls explain it.thank you.