How to evaluate US and Hong Kong stocks

How to value a company’s share price

Stock valuation can generally use the price-to-book ratio method, price-earnings ratio method, etc. to value stocks.

1. Price-to-book ratio method

Price-to-book ratio = (P/BV) that is: stock price per share/net asset per share. Stocks with a lower price-to-book ratio have higher investment value. On the contrary, the investment value is lower; but when judging the investment value, it must also be considered The market environment at that time, the company’s operating conditions, profitability and other factors.

2. P/E Ratio Method

Price-earnings ratio = (P/E) ie: stock price per share/earnings per share Generally speaking, the price-earnings ratio level is: 0: means the company’s profit is negative, 0-13: the value is underestimated: 14-20: the normal level, 21-28: that is, the value is overvalued, 28: reflecting the speculative bubble in the stock market

3. PEG method

PEG=PE/(corporate annual profit growth rate*100) the company’s net assets per share. The lower the PEG value, the greater the possibility that the stock price will be undervalued. Both the numerator and denominator of the PEG value involve the prediction of future profit growth, and the possibility of error is greater.

4. ROE method

Return on net assets = profit after tax/owner’s equity. This indicator reflects the level of return on shareholders’ equity and is used to measure the efficiency of a company’s use of its own capital. The higher the indicator value, the higher the return on investment.

How to calculate the stock valuation of listed companies?

1. What is Valuation

Valuation is the estimation of the value of a company’s stock.

2. How to value the company

Judging the valuation requires combining a lot of data. Here are three more important indicators for you:

1. P/E Ratio

Formula: price-earnings ratio = price per share/earnings per share, it is best to refer to the average price-earnings ratio of the company’s industry when doing specific analysis.

2. PEG

Formula: PEG = PE/(net profit growth rate * 100), when PEG is below 1 or lower, it means that the current stock price is normal or undervalued, and if it is greater than 1, it is overvalued.

3. Price-to-book ratio

Formula: Price-to-book ratio = stock price per share/net assets per share. This valuation method is very suitable for large or relatively stable companies. Generally, the lower the price-to-book ratio, the higher the investment value. However, when the price-to-book ratio falls below 1, the company’s stock price must have fallen below the net asset value, and investors should be very careful about this.