How to calculate the valuation of listed companies?
There are several calculation methods for the valuation of listed companies, and the commonly used valuation methods are:
1 P/E ratio method: P/E ratio = share price/earnings per share. It is the ratio of share price to earnings per share. Generally speaking, a high P/E ratio usually means that the market has high expectations for the company's future prospects.
2 Cash flow discount method: This method uses the company's future cash flow to determine the present value, but this method needs to consider the time value, and you can restore the future cash flow to the present value.
3 net asset value method: net assets = total assets-total liabilities. Based on the total net assets of the company, this method is suitable for companies with a large number of assets but no stable cash flow.
4 Comparative valuation method: it is to use the market valuation and financial indicators of other companies to determine the value of the company, compare the company with other companies in the same industry, and look for potential investment opportunities.
In the A-share market, the general valuation is the price-earnings ratio, which is divided into static price-earnings ratio and dynamic price-earnings ratio:
Static P/E ratio = price per share/earnings per share. The low P/E ratio indicates that the shorter the payback period, the smaller the investment risk. On the other hand, the higher the P/E ratio, the longer the payback period, the greater the investment risk.
Dynamic P/E ratio = current share price/annual expected earnings per share, and dynamic P/E ratio reflects the company's sustainable development ability.
Only by choosing the correct valuation method can we better understand the value of the company and make better investment decisions. Don't generalize when choosing stocks, but consider the growth potential of the company and the overall situation of the industry.