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Intrinsic value of a stock

Discussion in 'Fundamental Analysis' started by caringvij, Aug 28, 2016.

  1. caringvij

    caringvij Active Member

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    How to determine intrinsic value of a stock? Is their any formula available?
     
    caringvij, Aug 28, 2016
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  2. shabbir

    shabbir Administrator Staff Member

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    I have moved this into a separate discussion as this is no way related as a reply to Nifty thread.

    Coming back to your question I really doubt but if you expect a formula where you fit in some formula to get value stocks, all major investor would use that formula to invest in that stock way too early.

    The only formula is investing in good business at comfortable valuations.
     
    shabbir, Aug 28, 2016
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  3. bhat64

    bhat64 Apprentice

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    The world says DCF..discounted cash flow. Read it in the warren buffet book "The warren buffet way". Personally it's too much math for me for someone with an IQ of 0:) and my belief is stock picking cannot be fully left to Math! There are many other factors to consider in fundamental investing.


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    bhat64, Nov 12, 2016
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  4. bhat64

    bhat64 Apprentice

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    And if DCF was the easy way to find out the IV of the stock than everyone will try to be learning just that!!!So I agree with Shabbir no one good way is there.


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    bhat64, Nov 12, 2016
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  5. shabbir

    shabbir Administrator Staff Member

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    The Warren Buffet Way is must read book for every investor and you can read my view about it here - http://shabbir.in/the-warren-buffet-way/
     
    shabbir, Nov 12, 2016
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  6. bhat64

    bhat64 Apprentice

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    Agreed Shabbir. I actually could absorb everything in that book except the DCF. This book along with Phil Fischer common stocks and uncommon profits changed my view of how to look at stocks


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    bhat64, Nov 12, 2016
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  7. shabbir

    shabbir Administrator Staff Member

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    DCF in the book and Discounted Cash Flow mathematical formula are both different.
     
    shabbir, Nov 12, 2016
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  8. bmk397

    bmk397 New Member

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    I was just going through the cash flow of AIA Engineering and this is what I read. Cash from operations 547.02
    Cash from Investments (401.34)
    Cash from Financing (62.72)
    Net Cash Flow (62.72)

    I understand that net cash is negative but little else. Could you break this down for me in a simple way? I also noticed in some other companies that net cash flow is positive in one year and negative in the next. Please shed light on this as well. Thank you.
     
    bmk397, Mar 2, 2017
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  9. shabbir

    shabbir Administrator Staff Member

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    Cash flow is positive or negative based on how company uses cash.

    Company manufactures products A and sells it.

    So cash from operations is due to sale of A.
    Cash from investment can be negative or positive based on if company has invested or company has liquidated the investment. Can be purchase of capital assets.
    Cash from financing can be positive or negative
    Cash from financing where companies may finance (buybacks etc)
     
    shabbir, Mar 2, 2017
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