Intrinsic value calculations for long-term investment : company X
Duwal, Rakesh (2016)
Duwal, Rakesh
Laurea-ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016111816457
https://urn.fi/URN:NBN:fi:amk-2016111816457
Tiivistelmä
The goal of the study is to find the intrinsic value of listed public Finnish companies. The thesis will use two approaches. The first approach was established by Benjamin Graham and is used to calculate intrinsic value and provide some statistical guidelines for investing in a company. The second approach is the discounted cash flow method and specifically the method established by Aswath Damodaran will be used to calculate the intrinsic value. The method founded by Benjamin Graham is called the undervalued intrinsic value calculation method. Company X (institutional investor) is used as a case company. It is an organization that collect funds from its members and invest those funds in securities, financial instruments and different asset classes. Company X could use these analysis, statistical guidelines and formulas to buy a minority stake in different public companies.
In the stock market there are many companies whose market value differs from the intrinsic value. Finding and investing in those companies must be done only after careful analysis and by taking minimum risks. This thesis will analyze many companies from different perspectives to find the undervalued companies and find their intrinsic value. Different formulas will be used, and the intrinsic value is found for a certain date in the past (30 April 2002). The intrinsic value calculated through these two method is compared and analyzed. The intrinsic value calculated through the two methods is supported by the presentation of earnings and dividends recorded at a later date (2002-2015). Similarly, the market price trend of the company’s share is also presented to support the intrinsic value calculated through these methods. These methods of calculating intrinsic value are considered beneficial and any investors should perform careful calculations when calculating intrinsic value and should be conservative when buying any share of a company by having enough margin of safety.
Different formulas are used to determine whether the company is a good target for investment. Earning and dividend record from 2002 to 2015 shows that these calculations and analysis generate financial gain to investors. These analysis are beneficial and have a good scope in Finnish stock market.
In the stock market there are many companies whose market value differs from the intrinsic value. Finding and investing in those companies must be done only after careful analysis and by taking minimum risks. This thesis will analyze many companies from different perspectives to find the undervalued companies and find their intrinsic value. Different formulas will be used, and the intrinsic value is found for a certain date in the past (30 April 2002). The intrinsic value calculated through these two method is compared and analyzed. The intrinsic value calculated through the two methods is supported by the presentation of earnings and dividends recorded at a later date (2002-2015). Similarly, the market price trend of the company’s share is also presented to support the intrinsic value calculated through these methods. These methods of calculating intrinsic value are considered beneficial and any investors should perform careful calculations when calculating intrinsic value and should be conservative when buying any share of a company by having enough margin of safety.
Different formulas are used to determine whether the company is a good target for investment. Earning and dividend record from 2002 to 2015 shows that these calculations and analysis generate financial gain to investors. These analysis are beneficial and have a good scope in Finnish stock market.