What stock pricing model do Wall Street analysts use to come up with their "fair price"? - stocking model
The theory is that to get the discounted FCF model is the best way, the intrinsic value of the actual action. However, in the real world, this model is not the number closer to the reports from analysts. No idea why?
Friday, January 29, 2010
Stocking Model What Stock Pricing Model Do Wall Street Analysts Use To Come Up With Their "fair Price"?
3 comments:
Each analyst has his own style and do not say that there are these predictions, as he makes his life worth. What do the numbers and put in how much weight to give to each is a matter of opinion and review. The analyst is charged, in his opinion, not just plugging numbers into a standard formula.
For example, even if everyone uses exactly the same formula for the free cash flow the past does not matter. You can not go back into the past. The analyst uses its own estimates of future FCF. The key word is "estimated" because nobody knows exactly what Generating Box Company in the future.
It depends on what the company wants to do.
If you want to buy - for sale, is overvalued.
If you want to sell - buy, is cheap.
Help if you are pricing model, "commercial".
Growth!
Google may not have much free cash flow, but what is the growth potential?
Has also launched, Microsoft has a lot of money, but where the growth is going to come?
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