How Do You Determine Expected Market Value Of Stock?
Determining the expected market value of a stock is a mathematical process reflecting both internal company successes and external market variables. Based on sound analysis, a reasonable estimated market value can be obtained through the use of the price-earnings ratio. However, as with any computation, the quality of the result is directly related to the quality of the information you gather. Obtain earnings estimates for the company. As the earnings a company generates per share is a large determinant of the price of a stock, this is a critical first step. Fortunately for investors, earnings are so important that they are readily available. During “earnings season,” when most companies release their quarterly earnings numbers to the public, earnings estimates and results are frequently broadcast on financial news shows, and are printed regularly in the financial press. Additionally, many online sources will print a composite of analyst’s earnings estimates, including sites such as MS
