Valuation is to estimate the value of a stock, just like a vendor has to calculate the cost of goods when purchasing goods, so as to figure out what price to sell and how long it will take to return the money. This is the same logic as buying stocks. If I buy this stock at the market price, how long will it take me to make money back, and so on. But there are all kinds of stocks in the stock market, as many as things in large supermarkets. It is not clear which is cheaper and which is better. However, it is also skillful to estimate whether they have purchase value and can bring benefits according to their current prices.
Second, how to value the company?
You need a lot of data to judge the valuation. Here are three more important indicators:
1, P/E ratio
Formula: P/E ratio = price per share/earnings per share. You can refer to the average price-earnings ratio of the company's industry in advance when decomposing.
2、PEG
Formula: PEG =PE/ (net profit growth rate * 100). When PEG is smaller and smaller or not higher than 1, it means that the current stock price is normal or undervalued, while it is higher than 1 and overvalued.
3. P/B ratio
Formula: P/B ratio = price per share/net assets per share, suitable for large or relatively stable companies. Generally, the lower the P/B ratio, the higher the investment value. However, when the P/B ratio falls below 1, the company's share price must have fallen below its net assets, so investors should be very careful about this.
Let me give you a real example: Fuyao Glass.
As we all know, Fuyao Glass is a huge leading enterprise in the automobile glass industry at present, and the glass produced by its family will be used by major automobile brands. At present, the automobile industry has the greatest impact on its income, and its income is relatively stable. Then, let's evaluate what this company is like from the three standards just mentioned!
① P/E ratio: At present, its share price is 47.6 yuan, and the forecast earnings per share in 20265438 is +0.5742 yuan, and the P/E ratio is 47.6 yuan/1.5742 yuan = about 30.24. 20~30 is normal. Obviously, the current share price is not low, but the best way to judge it depends on the size and coverage of its company.