I am trying to calculate the intrinsic value for Facebook (FB).
- Should I use Median PE or Average PE to calculate the intrinsic value for FB? And which is more ideal to calculate intrinsic value going forward?
- To calculate the intrinsic value, should I use Historical EPS or Trailing EPS for FB? And which is more ideal to calculate intrinsic value going forward?
- Could you also help me see if I have calculated the intrinsic value correctly?
I will also send a separate email to you with the file in xlsx
Hi Xian Hui,
- There is a huge spike in FB valuation in the early years hence using the median PE for now will be more suitable. As long as there are no huge spike in the chart then you can use average PE.
- Use the trailing EPS to calculate the latest valuation for US companies while Asian companies use historical EPS.
- Yes your valuation is correct.
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