Future Value of a Share

SLM · 1 Future Value of a Share Tue Mar 22, 2011 4:42 pm

SLM

Stock Analytic

Posts : 19
Equity Stars : 3724
Reputation : 0
Join date : 2011-02-01

Hi Friends,

Can somebody explain me, how to calculate the future value of a particular share by using EPS, P/E ratios? It will help full to identify value shares rather than chasing blindly. Cool

Thanks...! Very Happy

SLM

Slstock · 2 Re: Future Value of a Share Tue Mar 22, 2011 5:13 pm

Slstock

Director - Equity Analytics

Posts : 6610
Equity Stars : 12215
Reputation : 1158
Join date : 2011-01-22

@SLM wrote:Hi Friends,

Can somebody explain me, how to calculate the future value of a particular share by using EPS, P/E ratios? It will help full to identify value shares rather than chasing blindly.

Thanks...!

SLM

Short Example :

ABC company 1 Year EPS is Rs 10
Now Trading at Rs 100 per Share.

PE= 100/10=10

Depending on the sector we can identify this as an undervalued share. For example if in Bank/Finance Sector, the sector PE might be 20. If this is 10, then it is undervalued. Fair Value can be PE 15 x Eps 10= Rs 150

As another example , if ABC is in Plantation sector we need to be cafeful as Plantation sector PE should be lower due to risk and volatility. So in Plantation I value say this is fair valeu already.

There many other factors which adds to a share value. It celebrity status, demand and supply, market leader, nu,mber of share in the market etc are a few other facotrs.

Hope this simple explanation is useful

SL.Market · 3 Re: Future Value of a Share Tue Mar 22, 2011 5:37 pm

SL.Market

Vice President - Equity Analytics

Posts : 1340
Equity Stars : 5597
Reputation : 146
Join date : 2011-03-15
Location : Colombo

@slstock wrote:

@SLM wrote:Hi Friends,

Can somebody explain me, how to calculate the future value of a particular share by using EPS, P/E ratios? It will help full to identify value shares rather than chasing blindly.

Thanks...!

SLM

Short Example :

ABC company 1 Year EPS is Rs 10
Now Trading at Rs 100 per Share.

PE= 100/10=10

Depending on the sector we can identify this as an undervalued share. For example if in Bank/Finance Sector, the sector PE might be 20. If this is 10, then it is undervalued. Fair Value can be PE 15 x Eps 10= Rs 150

As another example , if ABC is in Plantation sector we need to be cafeful as Plantation sector PE should be lower due to risk and volatility. So in Plantation I value say this is fair valeu already.

There many other factors which adds to a share value. It celebrity status, demand and supply, market leader, nu,mber of share in the market etc are a few other facotrs.

Hope this simple explanation is useful

Gr8 explanation brother.........

silentsahan · 4 Thank you very much bro.....Rep from me. Tue Mar 22, 2011 8:39 pm

silentsahan

Senior Equity Analytic

Posts : 68
Equity Stars : 3720
Reputation : -7
Join date : 2011-03-03

@slstock wrote:

@SLM wrote:Hi Friends,

Can somebody explain me, how to calculate the future value of a particular share by using EPS, P/E ratios? It will help full to identify value shares rather than chasing blindly.

Thanks...!

SLM

Short Example :

ABC company 1 Year EPS is Rs 10
Now Trading at Rs 100 per Share.

PE= 100/10=10

Depending on the sector we can identify this as an undervalued share. For example if in Bank/Finance Sector, the sector PE might be 20. If this is 10, then it is undervalued. Fair Value can be PE 15 x Eps 10= Rs 150

As another example , if ABC is in Plantation sector we need to be cafeful as Plantation sector PE should be lower due to risk and volatility. So in Plantation I value say this is fair valeu already.

There many other factors which adds to a share value. It celebrity status, demand and supply, market leader, nu,mber of share in the market etc are a few other facotrs.

Hope this simple explanation is useful

SLM · 5 Re: Future Value of a Share Tue Mar 22, 2011 11:10 pm

SLM

Stock Analytic

Posts : 19
Equity Stars : 3724
Reputation : 0
Join date : 2011-02-01

@ slstock - Thank you very much for your valuable comments.

sugandika · 6 Re: Future Value of a Share Wed Mar 23, 2011 4:20 pm

sugandika

Equity Analytic

Posts : 44
Equity Stars : 3712
Reputation : 7
Join date : 2011-03-03

@slstock - Thank you very much dude...

Sandun · 7 P/E Wed Mar 23, 2011 9:50 pm

Sandun

Stock Trader

Posts : 4
Equity Stars : 3682
Reputation : 0
Join date : 2011-02-13

How to find the sector P/E ratior or where to find ?

Slstock · 8 Re: Future Value of a Share Thu Mar 24, 2011 6:01 am

Slstock

Director - Equity Analytics

Posts : 6610
Equity Stars : 12215
Reputation : 1158
Join date : 2011-01-22

@Sandun wrote:How to find the sector P/E ratior or where to find ?

Go to
1) http://www.cse.lk
2) click EQUITY MARKET
3) click Sector Wise Market Summary

Hawk Eye · 9 Re: Future Value of a Share Thu Mar 24, 2011 7:05 am

Hawk Eye

Assistant Vice President - Equity Analytics

Posts : 832
Equity Stars : 5620
Reputation : 42
Join date : 2011-03-13

Calculae the potential profit growth that can be expected form its current operations (Eg
: Due to improved Business & economic conditions) and Present Value of Income generated from any new projects underway. Calculate the total EPS Company could gnerate in future, and multiply by the sector PE ratio.

This needs lot of information and calculations, unless the forecst is given by the company. You may try this with PCH . How the new subsidiary profits adding to the group will improve the price in future,developing ICT market effects, retirmens of short term expensive loans ect..ect

swan03 · 10 Re: Future Value of a Share Thu Mar 24, 2011 7:30 am

swan03

Vice President - Equity Analytics

Posts : 1241
Equity Stars : 5569
Reputation : 84
Join date : 2011-01-31

@slstock wrote:

@SLM wrote:Hi Friends,

Can somebody explain me, how to calculate the future value of a particular share by using EPS, P/E ratios? It will help full to identify value shares rather than chasing blindly.

Thanks...!

SLM

Short Example :

ABC company 1 Year EPS is Rs 10
Now Trading at Rs 100 per Share.

PE= 100/10=10

Depending on the sector we can identify this as an undervalued share. For example if in Bank/Finance Sector, the sector PE might be 20. If this is 10, then it is undervalued. Fair Value can be PE 15 x Eps 10= Rs 150

As another example , if ABC is in Plantation sector we need to be cafeful as Plantation sector PE should be lower due to risk and volatility. So in Plantation I value say this is fair valeu already.

There many other factors which adds to a share value. It celebrity status, demand and supply, market leader, nu,mber of share in the market etc are a few other facotrs.

Hope this simple explanation is useful

Great!! One rep from me Very Happy

Sponsored content

Latest topics

Future Value of a Share

1 Future Value of a Share Tue Mar 22, 2011 4:42 pm

SLM

2 Re: Future Value of a Share Tue Mar 22, 2011 5:13 pm

Slstock

3 Re: Future Value of a Share Tue Mar 22, 2011 5:37 pm

SL.Market

4 Thank you very much bro.....Rep from me. Tue Mar 22, 2011 8:39 pm

silentsahan

5 Re: Future Value of a Share Tue Mar 22, 2011 11:10 pm

SLM

6 Re: Future Value of a Share Wed Mar 23, 2011 4:20 pm

sugandika

7 P/E Wed Mar 23, 2011 9:50 pm

Sandun

8 Re: Future Value of a Share Thu Mar 24, 2011 6:01 am

Slstock

9 Re: Future Value of a Share Thu Mar 24, 2011 7:05 am

Hawk Eye

10 Re: Future Value of a Share Thu Mar 24, 2011 7:30 am

swan03

11 Re: Future Value of a Share

Sponsored content