How are a stocks 3- to 5-year share-price projections derived?
Our analysts have developed a comprehensive spread-sheet model that takes into account the current economic climate, the company’s operating fundamentals, including recent management initiatives, the actions of the competition, and many other relevant factors for each company. These models are used to develop our earnings and other financial projections for the coming 3 to 5 years. The Target Price Range is then calculated by multiplying the stock’s earnings per share for the period out 3 to 5 years (in the far right hand column of the statistical array) by the stock’s projected average annual price/ earnings ratio for the same period and then developing a range showing the likely high and low price. The width of the band of the share-price projections varies, depending on the Safety rank of the company. Riskier stocks have a wider band, and vice versa.
