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Casual Articles - Fair Value with Negative Growth
When trading penny stocks, once you've had a big success, your first thought me be about cashing out in order to enjoy the fruits of your investment. Keep in mind however that taking all the money off the table in the middle of a good deal (such as buying a
If you expect negative growth, even a seemingly low P/E rati
Did you know that search engines will give greater weight to a web sites backlinks - ie text links from other web sites - if and when those links are on domains hosted on diverse IP addresses.Hmmm... that makes sense you know as in the real world a p
Therefore, let's look at company with negative earning growth. How do we value them? For a 0% growth company, P/E ratio for the fair value is 13.4, which is equal to 7.45% return year in and year out. For negative growth company, P/E ratio should be lower of course, since it is giving less and less as the year goes by.
Let's try valuing negative growth with the following assumption. EPS growth is negative ten percent for the next five years and then stay constant. EPS for the current year is $ 1.00. So, after five years, EPS will come in at $ 0.59. Now, this is the constant $ 0.59 that we will get five years from now. The value of that cash flow today assuming 4.5% discounting rate is $ 0.47. Applying P/E of 13.4, this company is fairly valued at $ 6.34. Currently, earning per share comes in at $ 1.00 per share. If you look at the stock trading at $ 6.00, you may think that it is cheap since it is trading at a P/E of 6. But, if you expect it to have negative growth of negative ten percent for the next five years, this P/E of 6 doesn't sound cheap after all.
If you expect negative growth, even a seemingly low P/E ratio
What once many people thought they had a penalty, is now being called the Sandbox Effect and is causing new web sites not to rank very well in the search results of Google, not even for the least competitive phrases. Meaning that a filter is being placed on
Therefore, let's look at company with negative earning growth. How do we value them? For a 0% growth company, P/E ratio for the fair value is 13.4, which is equal to 7.45% return year in and year out. For negative growth company, P/E ratio should be lower of course, since it is giving less and less as the year goes by.
Let's try valuing negative growth with the following assumption. EPS growth is negative ten percent for the next five years and then stay constant. EPS for the current year is $ 1.00. So, after five years, EPS will come in at $ 0.59. Now, this is the constant $ 0.59 that we will get five years from now. The value of that cash flow today assuming 4.5% discounting rate is $ 0.47. Applying P/E of 13.4, this company is fairly valued at $ 6.34. Currently, earning per share comes in at $ 1.00 per share. If you look at the stock trading at $ 6.00, you may think that it is cheap since it is trading at a P/E of 6. But, if you expect it to have negative growth of negative ten percent for the next five years, this P/E of 6 doesn't sound cheap after all.
If you expect negative growth, even a seemingly low P/E rati
Myth: High Page Rank = high traffic. Fact: Big mistake. Page Rank only shows the popularity level of a website and has no connection with traffic. In fact, many websites with low Page Rank even have high traffic. <
Let's try valuing negative growth with the following assumption. EPS growth is negative ten percent for the next five years and then stay constant. EPS for the current year is $ 1.00. So, after five years, EPS will come in at $ 0.59. Now, this is the constant $ 0.59 that we will get five years from now. The value of that cash flow today assuming 4.5% discounting rate is $ 0.47. Applying P/E of 13.4, this company is fairly valued at $ 6.34. Currently, earning per share comes in at $ 1.00 per share. If you look at the stock trading at $ 6.00, you may think that it is cheap since it is trading at a P/E of 6. But, if you expect it to have negative growth of negative ten percent for the next five years, this P/E of 6 doesn't sound cheap after all.
If you expect negative growth, even a seemingly low P/E rati
Trade associations and professional societies are wonderful industry or profession collaborations and deliver high value to their members. After a decade and a half, speaking at association and society conventions and board meetings, I can safely make the ab
If you expect negative growth, even a seemingly low P/E rati
If your needs are short term, applying for long term loans is not a good idea. Instead go for short term loans. Small cash loans is also one such loan. It is open to everyone including bad credit borrowers also.Small cash loans can be availed to meet
If you expect negative growth, even a seemingly low P/E ratio does not translate into profitable investment. The industry I can think of right now is the auto industry. The US auto maker has been struggling for years to compete with its Japanese counterparts. Investors has priced in negative growth for quite sometime now. If you look at say GM or Ford, they have been trading at a seemingly low P/E ratio for several years. Until this year, both of them has been able to post profits. This year, they are all expected to post a loss. The moral of the story here is to watch out for company with low P/E ratio.
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