AAII's Guide to Top Web Sites

Stock Valuation & Ratings

While it is easy to find the current price of a stock, deciding whether the market is undervaluing or overvaluing the stock is a challenge. Stock valuation and ratings websites will typically offer an intrinsic value estimate based on future cash flows, growth rates, market conditions or a combination of several fundamental and risk factors. Keep in mind that the valuations are simply estimates and should be used in conjunction with other stock analysis techniques. Also, these estimates are based partially on subjective factors. In addition to a value estimate, certain sites will also include ratings on the stock. The top valuation sites allow the user to specify underlying fundamental assumptions based on their own research.



Where to Find: Click on How Much are Stocks Worth?
A box on the upper right side of the page provides navigation choices. There are two educational articles written to teach the basics of stock valuation. The valuation methods are based on discounted cash flow (DCF), price-earnings ratio, price-to-sales ratio, PEG ratio, Graham's formula, dividend discount model, Buffett's formula and capital asset pricing model (CAPM). Each valuation technique allows the user to enter relevant information on the stock in question and generate a value such as share price, fair price-earnings ratio and fair price-to-sales ratio. Highly beneficial site for simple, fundamental stock analysis because it provides a variety of fundamental calculators while allowing the user to control most of the inputs.

 MSN Money  


Where to Find: Type the stock ticker in the quote box at the top left of the page and then click on StockScouter Report under Ratings/Analysis on the left of company page.
Provides an overall rating between one and 10 for a stock based on company summary, fundamentals, ownership, valuation and technical trends. The summary offers a description of the company, its short-term outlook and its pros and cons. The rest of the page gives a letter grade for fundamental, ownership, valuation and technical areas, explaining the factors that went into the grade. The downside is that no true valuation is given, and there are no user inputs. The ratings, however, are fairly in-depth. Each individual section provides two or three factors incorporated in the letter grade provided. Each factor is rated from very negative to very positive.

 ValuEngine.com (fee-based)  

$149.95/yr. (free 30-day trial)

Where to Find: Type a stock’s ticker in the quotes search box after logging in (subscription required).
Provides fair values for individual stocks that are derived from a proprietary model employing three fundamental models: trailing 12-month earnings per share, consensus forecasted earnings per share for the next 12 months and the current 30-year Treasury yield (all of which are updated throughout the day). Models also make use of firm-specific parameters such as long-term earnings growth rate, volatility of earnings growth rate, systematic risk of the firm and dividend payout ratio. Unfortunately, little information is made available regarding the actual process.

ValuEngine rates companies from one (strong sell) to five (strong buy). Individual investor membership includes market overview and delayed quotes, portfolio management functions, a stock screening tool and ValuEngine rating on over 4,000 stocks. Analyst research is also provided. ValuEngine is a top website for stock valuation, but no services are provided free of charge