How can we know the actual value of the stock ..?

Question

Does anyone know the formula to know the stock value... ie .. stocks are overvalue or under value.. how can we know...

Answer 1

It is never carved in stone. The market value is determined minute by minute as orders to sell are compared to orders to buy. When they match--sold!--you know what the price is at that point in time.

What comes close to "actual value" is something called "book value". With every business there are two principle reporting valuations: on the balance statement, on the income statement (profit or loss). Corporations represent the information in "per share" basis. Corporations are valued in terms of market value, which is the price per share multiplied by the number of shares outstanding; and they are valued in terms of asset value, what resources does the company have to work with, as represented financially; and equity values, who owns that asset value, which is divided among the enterests of creditors and stockholders. These numbers are often found, sometimes with a little bit of digging, fairly easily and serve as the basic benchmark for a company's valuation. Next, and this is important, there comes history and prospects, the expectations for the future. Has the company a track record of frequently expanding profits? Does the company appear to be continuing that trend?

Remember the old line from geometry, what is the shortest distance between two points?--a straight line. In real life, lines are rarely straight. In business, particularly stock evaluations, specific trends are rather jagged. Then we employ averages and other mathematical functions to smooth out those ragged lines and make general curves. From this we see patterns and corridors with ceilings and floors in our estimates and interpretations of the data.

Then there are comparisons. Which is a better buy, Pepsi or Coke? Home Depot or Lowes? The comparative choices get even bigger in autos and far, far bigger in energy, materials, and retail. Here is where we balance trends and recent events and upcoming events. Then we watch the volumes of public sales, news of private sales (mergers and acquistions, insider trading, etc.)

Finally, the determination of under/over value rests in the moment of weighing comparative values, for as shallow or as deep as the investor/speculator cares to go. Looking for an absolute number or position? There aren't any. Want a specific and elegantly simple formula that never, ever fails? There isn't any. It is like picking an apple. I like the type, the color, the weight, the firmness, but I like that one too. The final decision is a comparative value judgment. Explore, compare, then just decide. You will get some wrong. You may even get some right. That is the game.

Answer 2

There is no real correct answer to this question in my opinion.
There certainly are overvalued and undervalued stocks without a doubt. The problem is that the future is very uncertain and very difficult to predict. The price of a stock today generally attempts to discount future probable events. The process however does not work very well. Many astute investors have taken advantage of this fact to buy undervalued stocks and make a good deal of money. Warren Buffet is the most renound in the U S. But there are many others. At times most if not all stocks are overvalued. That is a time to be very cautious indeed. That generally occurs when the average PE of a stock rises above 20. At other times most if not all stocks are undervalued. That is a time to stock up. That generally occurs when the average PE of a stock drops towards 10. In between one must evaluate each company on a case by case basis. In India at the moment I believe the average PE is about 30. One should be very cautious at such high valuation levels.

Answer 3

Is the stock listed anywhere on any exchange? Is it a private company, if the stock is in private hands it is probably not for sale. If it is listed it has a market price or what someone is willing to pay for the stock and what someone is will to sell at that price.

Look at the balance sheet which has assets and liabilities.

Use a service like Yahoo go to finance and then symbol look up and begin putting in company data. Valueline is a helpful service and the public library has this and other resourses; if it is a public company and the stock is traded.
Talk to a stock broker at a bank or wire house.
Good luck & aDios

Answer 4

there is not any real suited answer to this question for my area. There rather are puffed up and undervalued shares positively. the subject is that the destiny is fairly unclear and extremely confusing to foretell. the cost of a inventory on the instant frequently tries to diminish fee destiny probable activities. the approach even with the undeniable fact that would not artwork ok. Many astute investors have taken earnings of this actuality to purchase undervalued shares and make a solid deal of money. Warren Buffet is the main renound in the U S. yet there are various others. at cases maximum if no longer all shares are puffed up. this is a time to be very careful certainly. That frequently happens whilst the common PE of a inventory rises above 20. At different cases maximum if no longer all shares are undervalued. this is a time to fill up. That frequently happens whilst the common PE of a inventory drops in the direction of 10. In between it is common to desire to evaluate each and every business enterprise on a case by way of case foundation. In India on the 2d i've got confidence the common PE is approximately 30. One must be very careful at such severe valuation ranges.

Answer 5

Over value and under value suggests that the stock has some intrinsic, natural value. The company may, but you are not buying the company. The stock's value is exactly what people are willing to pay for it. Exactly. Stocks may be said to be oversold or undersold, meaning s shortage of buyers or sellers, but is part of technical analysis. (Google that topic). The stock's value has mostly to do with the psychology of the market, little to do with economics.

Answer 6

There is a way to figure it but it's no easy. You need to be able to READ the graphs and charts and you need to be able to intrepret them...

Just ask you broker or watch CNBC.. Unless you have some very good math skills and are good at reading candlestick charts... you won't get to the first stock.

Answer 7

If the P/E is 3 digits then it's overvalued.
If the P/E is 1 digit then it's undervalued.

Answer 8

The answer is the difference between those who make money in the market and those that don't.

Good luck!

Answer 9

You can start by looking at the target price