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QuestionsCategory: Investor PsychologyValuation of Nestle Malaysia
Viv asked 5 months ago

Ref to the case study on Nestle Malaysia. Noted that this co is valued using both the Div Yield and PE. Why is it that this co is taken as a growth co where PE is used to value? Also why is it that we do not compute the Intrinsic Value using its EPS and compare that against the market price? 

1 Answers
Victor Chng answered 5 months ago

Hi Viv,
The Nestle Malaysia is an example of a value growth company rather than a growth company. PE is the best valuation for Nestle as certain companies with predictability are usually price at a premium rate. If you will to project Nestle based in discounted earnings and compare to market price. You will realised the figure is always way below the market price. Hence, you will never look into Nestle. 
The best way as mentioned is to find the PE average of Nestle and try purchasing them when they are below the average.