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Consistent growth in earnings, dividends and cashflow
Sustainable competitive advantage
Low debt
Strong management team
Internal scandals
Negative news reports
Economy down turn or recession
Significant change in a company’s business environment
Good news reports
Share buy backs
Stock splits
Economic upturn
Mergers and acquisitions
Compare companies within the same industry
Compare a company with the industry average
The difference = relative value
Financial Ratio Analysis
Intrinsic/real value
Find a company’s intrinsic value
Compare the intrinsic value with the market value
Undervalued = cheap
Overvalued = expensive
Valuation Methods
The price that people are willing to pay for a product or service
Perceived Value =/ Absolute Value
The stock price of a company reflects perception
Qualitative Research