VALUATION - CURRENT / FORWARD is a proprietary metric (likely will not be shown in detail in the future) that for our use in valuation-based preset screens and shows the specific companies CURRENT VALUATION and FORWARD VALUATION. Basically the way we use it is to check to see if a company is currently in value according to the current estimates and also if the company is still in value based upon the current price at the end of our last specific estimate.
The following information provides an explanation of the valuation metrics used to assess the stock price’s relationship with the estimated future earnings per share (Adj. EPS). The two main metrics discussed are “Current Valuation” and “Forward Valuation.” These metrics are used to determine whether a stock is undervalued or overvalued based on the estimates chart for Adj. EPS.
Current Valuation:
Current valuation is a calculation that measures how much the stock’s price deviates from the orange line on the estimates chart ONLY for Adj. EPS, at the present moment. The orange line represents the projected price based on the earnings estimates.
1.1. Calculation:
The current valuation is determined by finding the percentage difference between the current stock price and the value indicated by the orange line on the estimates chart.
1.2. Interpretation:
When the current valuation is negative, it signifies that the stock is undervalued. A negative value implies that the current stock price is below the projected value based on the Adj. EPS estimates.
Example:
Suppose the current valuation is calculated as -3%. In this scenario, the stock is considered to be 3% undervalued, indicating that its current market price is 3% below the projected value based on the Adj. EPS estimates.
Forward Valuation:
Forward valuation is similar to current valuation but takes into account how much the stock could be worth at the furthest out estimate on the Adj. EPS estimates chart.
2.1. Calculation:
To calculate the forward valuation, we determine the percentage difference between the stock’s current price and the value indicated by the orange line corresponding to the furthest out estimate on the estimates chart.
2.2. Interpretation:
When the forward valuation is negative, it indicates undervaluation. This means that the stock’s current price is below the projected value based on the Adj. EPS estimate at the furthest date on the chart.
Example:
Suppose the forward valuation is calculated as -10%. In this case, the stock is considered to be 10% undervalued, suggesting that its current market price is 10% below the projected value based on the Adj. EPS estimate at the date of the furthest estimate on the chart.
Summary:
In summary, the valuation metrics, “Current Valuation” and “Forward Valuation,” provide insights into whether a stock is undervalued or overvalued based on the estimates chart for Adj. EPS. Negative values indicate undervaluation, while positive values imply overvaluation. By analyzing these metrics, investors can make informed decisions regarding their investments.
Please note that these valuation metrics are solely based on the Adj. EPS estimates and do not account for other metrics yet. It is essential to consider other financial indicators and conduct thorough research before making investment decisions.