hi victor, thanks for today’s workshop.

some of the parts were a little too fast for me to absorb so here is my question.

may i confirm if the calculation for the intrinsic value of a stock is as follows?

Intrinsic Value = (EPS of stock) x (Mean Value of it’s historical PE range, i.e. the ‘horizontal line’ plotted on a PE chart)

may i know if is this correct?

thanks,

edmund toh

Hi Edmund,

Yes you are right. If you are still unclear, you can go through the online module below.

https://investmentquadrant.com/the-valuation-quadrant/price-earnings-ratio/

Thanks, victor. Much appreciated.

Welcome :)

is there another method to find instrinsic value? you mentioned some companies arent accurate to use PE ratio

is there another method to find instrinsic value? you mentioned some companies arent accurate to use PE ratio

You can also look at Price-to-Book, Price-to-Cashflow ratios depending on your use case.

Hope it helps.

Hi Jieren, how to calculate with PB? We find the 10 year average of PE and then multiply by the latest book value per share?

Hi James,

You can plot the PB chart using the same method for PE chart.

Thanks JR.

so to find intrinsic value you take the current EPS of latest quarter to multiply by the average PE?

Yes, take the current TTM EPS multiply by average PE

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