simple way to calculate Intrinsic Value,
take past 3 years AV eps
EX
Stock-RATNAMANI
Code:
Mar 12 Mar 13 Mar 14
24.02 29.30 30.58
3year AVG EPS-27.96
then, the business going to earn only 27.96rs for the next coming 10years and no growth,
then the value fo the stock is 27.96*10=279.6
the Intrinsic Value of the stock-279.6rs
say the business have growth 9% per year
then give 9% G ot the stock for next coming 10 years
HTML:
eps 27.96
g 9%
year 2015 30.48
2016 33.22
2017 36.21
2018 39.47
2019 43.02
2020 46.89
2021 51.11
2022 55.71
2023 60.73
2024 66.19
total value 463.03
if the earnings grow at 9% per year ,then the value is-463.03
note
this valuvation only work on stable bissness,it will not work at unstable bissness,to know the
stability,take past 10 years of EPS and see how the growth and performs
HTML:
EX
business A
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
5 6 6.5 7 8 8.2 9.5 10.1 12 14.5
business B
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
10 2 -3 15 2 5 -3 15 2 1
see the bis A earnings, nice growth and stable, easy to value,
but the B no stable earnings, and hard to value