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Aguytrying
#501 Posted : Tuesday, July 10, 2012 10:32:33 PM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
youcan'tstopusnow wrote:
Okonkwo wrote:
Hon Wazuans (Professionals)

Given EPS, PE, DPS and NAV, how do you determine the real value of a share to know whether it is over-valued or undervalued. For example:

EPS = 0.268
PE= 13
DPS= 1.5
NAV= 2

Q1. What is the right market value of this share?
q2. Is it over/under valued if market value is Ksh.10?

Pls clarify


EPS 0.268 na DPS 1.5? Kwani this company is taking loans to pay dividends? I would avoid;-)


@ Okonkwo which company is this. No way can DPS be more than EPS.
Anyway that company looks over valued. An undervalued company would have a NAV not more than 1.3, ideally below 1. a Pe ratio of below ten, lets say ~6-8. But its important to look at debt/equity- you dont want a company with high loan burden.
The investor's chief problem - and even his worst enemy - is likely to be himself
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Okonkwo
#502 Posted : Wednesday, July 11, 2012 1:06:37 PM
Rank: Member


Joined: 1/29/2009
Posts: 85
@Elder - thanks very much for your remarks. I just used random numbers for ease of explanation. If I can use closer numbers:

Par Value: 1
Market Value: 80
EPS: 10.66
P/E: 7.13
DPS: 9.59
NAV: 27
Number of shares listed: 2,500,000

1.What would the right market share price of this share? Which formula do you use to determine the ideal price?
2. What is the ideal Debt/Equity ratio?
3. Do you recommend buy/ or no buy?

Please answer each question. This is just a classic example. Thanks
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Aguytrying
#503 Posted : Wednesday, July 11, 2012 5:37:18 PM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
Okonkwo wrote:
@Elder - thanks very much for your remarks. I just used random numbers for ease of explanation. If I can use closer numbers:

Par Value: 1
Market Value: 80
EPS: 10.66
P/E: 7.13
DPS: 9.59
NAV: 27
Number of shares listed: 2,500,000

1.What would the right market share price of this share? Which formula do you use to determine the ideal price?
2. What is the ideal Debt/Equity ratio?
3. Do you recommend buy/ or no buy?

Please answer each question. This is just a classic example. Thanks


It would be better if you were talking of a real company. your DPS looks highly fictional!
P/E is marketvalue/EPS. so that P/E you've put there is wrong it should be 7.5.
The NAV is 27 and the market value is 80. a price to book of 2.96! ideal is below 1.3 like i said yesterday. It means you are paying three times for what the company is actually worth!

answers:
1. anything below 35(1.3*27)
not one factor, but a summation of many factors about the company and prevailing environmental conditions.

2. im not sure about this, it depends on the performance and risk managemnt of the company. but the lower the better.

3. No buy. price to book(market price/NAV) too high at 2.96!

I would advice you to acquire knowledge about stocks, start with www.investopedia.com.
There are no cook books in picking stocks, its knowledge and experience that will help you.

An investment in knowledge pays the best interest.

The investor's chief problem - and even his worst enemy - is likely to be himself
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kyt
#504 Posted : Wednesday, July 11, 2012 5:53:21 PM
Rank: Elder


Joined: 11/7/2007
Posts: 2,182
one should also check on the industry's P/E average and check wether the company is within the ave. historical PE's should also be factored in!!
LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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Aguytrying
#505 Posted : Wednesday, July 11, 2012 9:24:11 PM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
kyt wrote:
one should also check on the industry's P/E average and check wether the company is within the ave. historical PE's should also be factored in!!


true. infact an average EPS of the last seven fy's should be used ideally.
The investor's chief problem - and even his worst enemy - is likely to be himself
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PKoli
#506 Posted : Wednesday, July 11, 2012 9:43:18 PM
Rank: Elder


Joined: 2/10/2007
Posts: 1,587
Aguytrying wrote:
kyt wrote:
one should also check on the industry's P/E average and check wether the company is within the ave. historical PE's should also be factored in!!


true. infact an average EPS of the last seven fy's should be used ideally.


There are cases when the company has a fairly high p/e but has good strategies for growth. In this case you should not ignore it. I remember when equity was being listed and during its first years of trading it had high p/e but for the people who could look forward, it had a low forward p/e. I missed out big on this..
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Okonkwo
#507 Posted : Thursday, July 12, 2012 11:35:59 AM
Rank: Member


Joined: 1/29/2009
Posts: 85
Thanks all. It seems there are so many factors to be considred, and sometimes the forces of supply & demand may work. With all this info

@Elder
1. What is the Insurance Industry Average EPS?
2. When CIC lists on Wed, what maximum price should I buy at?
3. Given the ratios EPS, DPS, PE, NAV, Equity/Debt, Dividend Yield how will you rank them in order of strength (start with strongest) when determining whether to purchase a share?
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Okonkwo
#508 Posted : Friday, July 13, 2012 4:43:06 PM
Rank: Member


Joined: 1/29/2009
Posts: 85
@Elder
Politely revert. This will be my last question.
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guru267
#509 Posted : Friday, July 13, 2012 5:48:26 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
.
Mark 12:29
Deuteronomy 4:16
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Aguytrying
#510 Posted : Friday, July 13, 2012 9:18:22 PM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
Okonkwo wrote:
Thanks all. It seems there are so many factors to be considred, and sometimes the forces of supply & demand may work. With all this info

@Elder
1. What is the Insurance Industry Average EPS?
2. When CIC lists on Wed, what maximum price should I buy at?
3. Given the ratios EPS, DPS, PE, NAV, Equity/Debt, Dividend Yield how will you rank them in order of strength (start with strongest) when determining whether to purchase a share?


elder is a rank not a name.
you have to find those answers by yourself, i do not have that information
The investor's chief problem - and even his worst enemy - is likely to be himself
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georgegop
#511 Posted : Sunday, July 15, 2012 8:57:19 PM
Rank: Member


Joined: 8/30/2010
Posts: 183
Location: Migingo
CIC reveals Sh1 billion property investments Pray

http://www.businessdaily.../-/135t2l8z/-/index.html
Don't Work for Money, Let Money Work for You..
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Hunderwear
#512 Posted : Sunday, July 15, 2012 9:49:14 PM
Rank: Member


Joined: 4/14/2011
Posts: 639
Anyone with the Information memorandum?
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PKoli
#513 Posted : Sunday, July 15, 2012 10:20:39 PM
Rank: Elder


Joined: 2/10/2007
Posts: 1,587
Hunderwear wrote:
Anyone with the Information memorandum?


Non, not even at CIC website.
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mwekez@ji
#514 Posted : Monday, July 16, 2012 9:51:10 AM
Rank: Chief


Joined: 5/31/2011
Posts: 5,121
georgegop wrote:
CIC reveals Sh1 billion property investments Pray
http://www.businessdailyafrica..../-/135t2l8z/-/index.html


Quote:
To diversify its revenue sources further, CIC Insurance is planning to work with Saccos in the transport sector to venture into the public service vehicle (PSV) industry.


Venturing property investment is a good idea, but PSV ….
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kryptonite
#515 Posted : Monday, July 16, 2012 10:05:14 AM
Rank: Member


Joined: 2/1/2010
Posts: 272
Location: Nairobi
mwekez@ji wrote:
georgegop wrote:
CIC reveals Sh1 billion property investments Pray
http://www.businessdailyafrica..../-/135t2l8z/-/index.html


Quote:
To diversify its revenue sources further, CIC Insurance is planning to work with Saccos in the transport sector to venture into the public service vehicle (PSV) industry.


Venturing property investment is a good idea, but PSV ….


Yeah, I cringed when I read that too
The harder you work, the luckier you get
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mwekez@ji
#516 Posted : Tuesday, July 17, 2012 12:19:16 PM
Rank: Chief


Joined: 5/31/2011
Posts: 5,121
Finally, the long awaited IM is here, albeit at the last minute

http://cic.co.ke/downloads/CIC_...tion_Memorandum_2012.pdf
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e_kijana
#517 Posted : Tuesday, July 17, 2012 2:55:37 PM
Rank: Member


Joined: 1/17/2009
Posts: 55
Read the IM... on the PSV issue it is clear from IM that they dont want to provide insurance for PSVs per se (like the rest of the PSV insurers), but want to invest in Public Service Vehicles in partnership with a society... basically be a Major shareholder in a new bus public transport company. If they end up insuring their own PSVs, then risk is very much minimised.
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jerry
#518 Posted : Tuesday, July 17, 2012 4:08:40 PM
Rank: Elder


Joined: 9/29/2006
Posts: 2,570
e_kijana wrote:
Read the IM... on the PSV issue it is clear from IM that they dont want to provide insurance for PSVs per se (like the rest of the PSV insurers), but want to invest in Public Service Vehicles in partnership with a society... basically be a Major shareholder in a new bus public transport company. If they end up insuring their own PSVs, then risk is very much minimised.

INVESCO is already in partnership with and partly owned by Matatu operators/SACCOs.
The opposite of courage is not cowardice, it's conformity.
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guru267
#519 Posted : Tuesday, July 17, 2012 9:44:59 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
jerry wrote:
e_kijana wrote:
Read the IM... on the PSV issue it is clear from IM that they dont want to provide insurance for PSVs per se (like the rest of the PSV insurers), but want to invest in Public Service Vehicles in partnership with a society... basically be a Major shareholder in a new bus public transport company. If they end up insuring their own PSVs, then risk is very much minimised.

INVESCO is already in partnership with and partly owned by Matatu operators/SACCOs.


Kwani all PSVs are matatus??
Mark 12:29
Deuteronomy 4:16
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PKoli
#520 Posted : Tuesday, July 17, 2012 11:26:42 PM
Rank: Elder


Joined: 2/10/2007
Posts: 1,587
mwekez@ji wrote:
Finally, the long awaited IM is here, albeit at the last minute

http://cic.co.ke/downloads/CIC_...tion_Memorandum_2012.pdf



Many thanks for the IM. Let us wait for tomorrow. Any bidders?
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