Stock Valuation & Financial Modelling for Stock Investing

Explore ratio analysis concepts - liquidity, profitability, and solvency ratios - to support stock valuation and financial modelling, using Microsoft as a practical example.

Explore stock liquidity by examining the current ratio, asset test ratio, and net cash per share, using Microsoft’s 2020 balance sheet to illustrate high liquidity.

Explore profitability by three revenue-based ratios—gross profit margin, operating profit margin, and net profit margin—and interpret them using Microsoft's 2020 example to show industry context and R&D impact.

Assess solvency by examining gearing, debt-to-equity, and interest cover, illustrated by Microsoft 2020 with 0.335, 0.504, and 21.5 indicating medium risk.

Assess liquidity, profitability, and solvency using ratios like current 2.52, quick 2.5, cash 1.89, margins net 30% and gross ~70%, gearing 0.335, leading to stock valuation.

Explore ratio analysis across liquidity, profitability, and solvency to gain a clear view of stock analysis, valuation, financial modelling, and financial statements.

this lecture introduces relative valuation, comparing metrics like pe ratio, price to sales, and price to cash flow to benchmark using a market-cap weighted average, and covers pros and cons.

Explore the price-earnings ratio, a widely used metric linking market data with accounting numbers. Compare companies within the same industry against a benchmark to judge value.

Explains the price to earnings ratio formula, showing PE equals share price divided by earnings per share, and that high or low PE alone doesn't determine value.

Examine the price-earnings ratio, defined as share price over earnings per share, and how it signals whether a stock is cheap relative to peers.

Explore how the trading price on the exchange and earnings per share, whether quarterly or annually, align with the PE ratio formula to value stocks.

Compute trailing p/e using the latest quarterly eps and current share price, then compare with industry peers for relative valuation.

Apply the price-to-book value ratio to Comfortdelgro to identify a buy zone within 10% of its book value, computed from assets minus liabilities with goodwill kept intact, about $1.39.

Explore how price to book value guides stock valuation for ComfortDelgro, a Singapore land transport company, showing how book value provides support during market dips and matters for timing purchases.

Apply the price-to-book value ratio to evaluate Singapore Airlines, examining its balance sheet, assets, liabilities, and shares outstanding to estimate book value per share and identify attractive buy zones.

Apply book value to stock decisions for US airlines, analyzing Covid-19 effects, liquidation scenarios, and buying near or below book value as prices recover.

Use price to sales ratio to value stocks with negative profits, as price to earnings is meaningless. Compare peers like Alibaba and Amazon to assess relative price to sales valuations.

Absolute valuation measures a stock's intrinsic value by discounting future benefits to present value and comparing to price. It emphasizes the discount rate, growth assumptions, and the margin of safety.

Explore the dividend discount model and how to discount future dividends to present value, determine P0, and use Gordon growth to value perpetual or growing dividends.

Take the ddm quizzes to explore six questions on the Gordon growth model, including the discount rate vs growth rate, d1 computation, g scenarios, and deriving growth from past dividends.

Answer the quiz 1–5 on the dividend discount model, showing why r>g yields p0=d1/(r−g) and how to derive d1 from d0, g, and wacc.

Learn to compute dividend growth rates from real dividends using Excel, and compare average growth with the future value method to apply in stock valuation and DDM.

Calculate the weighted average cost of capital (WACC) for a US company to discount future cash flows, using CAPM for the equity cost and an after-tax debt cost.

Learn how the discount factor uses WACC to estimate intrinsic value and how market variables like the risk-free rate and expected returns influence it.

Explore the free cash flow method for stock valuation, deriving cash flow from revenue and discounting to present value to estimate a company's value, with perpetuity or terminal value approaches.

Compute the intrinsic value of a public company using software, shown with Microsoft, by modeling free cash flow and growth rates. Compare to price to decide buy or sell.

Explore why discounted cash flow intrinsic value differs from the actual trading price, emphasizing absolute valuation, forward-looking market expectations, and the role of complementary measures like price-to-earnings ratios and price-to-book.

Use discounted cash flow to estimate intrinsic value, forecast future cash flows with careful assumptions, and avoid garbage in, garbage out by checking sensitivities and terminal value.

Analyze a three-bank case study to compare absolute and relative valuations using annual reports and stock data to determine ballpark prices for informed buy or sell decisions.

Conduct a three-bank case study valuation using dividend data and earnings per share, applying the dividend discount model with Gordon growth and a relative valuation to rank banks by price.

Calculate and interpret dividend growth rates for three banks using quarterly and half-year dividends, assessing pandemic effects and realistic long-run growth targets (about 2.5–3%).

Derive discount rates and the absolute stock price using Gordon's growth model from a 3.6% dividend growth rate, and apply CAPM with beta and market risk premium to price.

Examine data gathering challenges in a bank valuation case study, compare the dividend discount model with discounted cash flow, and apply relative valuation.

Analyze three banks' relative valuations using PE and price-to-net-asset-value ratios, highlighting trailing earnings per share, net asset value versus book value, and the effect of daily price moves.

Use relative valuation with the price-to-earnings ratio to compare stocks, recognizing that the cheapest share isn't always the lowest price and price gaps signal premium.

Learn stock valuation and financial modelling to buy at the right price, distinguish good from bad stocks, and plan when to buy or sell within a comprehensive investing course.