Using a Simple Worksheet to Analyze a Stock
Step 1: How Do I Determine What a Stock is Worth?
The task of selecting stocks can be made easier by organizing the decision process to ensure that salient data and information is evaluated in some logical sequence that allows an investor to make a reasonable decision.
How Do I Determine What a Stock is Worth?
What's the Best Way to Organize the Data I Collect?
How Can I Tell if My Figures Are Reasonable?
The ultimate goal is to determine, through a range of values, what you think the stock is really worth.
The Valuation Worksheet provides an easy-to-follow systematic format that allows you to walk through the complete process of placing a value on a stock without getting bogged down in complicated financial analysis. However, any final real-world decision would include the further evaluation of other fundamental aspects of the company.
At the bottom of the worksheet, two valuation models are presented, one based on a firm's earnings and the other on its dividends.
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