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Browse Helmbeam articles tagged Valuation.
Share buybacks: when does a smaller share count help you?
If you keep your shares while a company buys back other shares, your fraction of that company can rise. Whether you benefit depends on what the company paid and what it could have done with the cash instead.
How to find undervalued stocks and check whether they are really cheap
To investigate potentially undervalued stocks, find a mismatch between the price and what you think the business can earn. Then test the business, financial risks and valuation assumptions to see whether that view holds up.
How to value a stock: fair value, assumptions and a worked example
Valuing a stock means estimating what its future economic benefits could be worth today, then identifying the part attributable to each share. The result depends on assumptions about cash generation, risk, financing and ownership, so changes in those assumptions change the estimate.
What is a good P/E ratio? Why a low number is not enough
There is no universally good P/E ratio. The useful question is what earnings the price assumes, how durable those earnings are and what can change them.
How to compare a stock's valuation with its own history
A historical valuation comparison is useful when you account for changes in the price, financial measure and business.
Cheap stock or value trap? How to test the apparent bargain
A value trap is a stock that appears cheap on a familiar measure while the business or shareholders' claim is deteriorating. To investigate one, test why the valuation is low and whether the earnings, cash and financing behind it can hold up.
Why can an unprofitable company have a high stock-market value?
An unprofitable company can have value because investors expect future cash generation or value its assets and options. The current loss does not settle its future prospects. Equally, a large addressable market or rapid growth does not establish that shareholders will benefit.