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