Expected stock price 2 to 5 years from now
Hi,
How would I go about modeling the stock price 2 to 5 years from now? Would you just extend the forecasted period by the necessary number of years or use a different approach?
Hi,
How would I go about modeling the stock price 2 to 5 years from now? Would you just extend the forecasted period by the necessary number of years or use a different approach?
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You're representing yourself as a 3+ year analyst in Equity Research and you posted in the I-banking forum, so I'm really confused by this question. Are you really a 3rd year equity research analyst?
Assuming you are ...
What project is this question related to? (i.e., what are you trying to find out?)
If you are looking for the expected value at any point in time based on a cash flow projection, then it's just basic PV/FV math moving forward or backward in time.
I have been in a boutique in Europe and haven't done a lot of modeling - more research and sourcing than a thorough analysis. I have been assigned this task and don't want to screw up.
Basically I want to estimate the stock price of a company some time in the future. I can do the DCF and get the price of a particular stock as of now, but I want to see where the price may go based on my projections in 2012-2015. So I thought for 2012, i would project 2011-2012 and then TV for 2013. I would only take the FCF for the TV ,and divide it by WACC-r, not counting the FCF for 2011-2012, substract the projected debt outstanding and add (hypothetically) any cash that has been generated and that is non-operating. I want to know if the stock is currently trading at 10, what will it trade for in 2015 based on my assumptions. Is this the right approach?
I would just figure out what multiple you'd expect the thing to trade off based on future projections of EBITDA/EBIT/Sales/Earnings/Etc. and then adjust accordingly.
For example: Say their P/E right now is 10x based on the most current earnings (stock @ $20, eps @ $2.00/sh). If you'd expect earnings to move to $4.00/sh, and investors to pay the same 10x multiple, the stock would double to $40.
Thanks, a multiple is a good idea. Would you say that my DCF approach is doable as well?
You should do both, naturally. It is of course doable and if I was looking for you to value a company 2 years from now I would expect more than a simple look at multiple expansion/contraction
You could also use V=D(1+g)/(k+g), however, the drawback is the fact that it assumes constant growth and required return. Since most companies have som standard of retention ratio (b) and ROE, it would not be a problem to solve for g (growth)
g=ROExb k= required rate of return D= dividend
I do not know the company you are researching (volatility), therefor I don't know if the periode (2-5 years) is to long for the fomula to have any prediction power.
pindur - here's what I meant by moving forward or backward in time:
If you have 5 years of CFs and a terminal value, how do you determine PV today? Discount all of those cash flows back to today, of course, which is what you've done.
But what about 1 year from now? You take the year 1 CF and get the FV of that 1 year from now, then discount all the remaining CFs by 1 less year than you did in the first example. Now you know the PV 1 year from now.
Basically, compound or discount all the cash flows to the year you want to find the value. There is no need to change your CF projections.
Let me know if that doesn't make sense.
-JB
I usually just pick a number in 3 years and 5 years and back into it! that's what most these guys do anyway,
JB - not sure exactly what do you mean. I have unlevered FCF year 1 $91.4, year 2 $157.7, year 3 $224.7, use WACC of 11%, mid-year discount period, 20m shares. For the first year, I would get FV $91.4*(1+11%) = $101.4. But what about the rest up to year 3 to get price per share? Thanks
You just need to get all of the CFs in the same year.
For the first year, you've done that by moving it forward one year. The 2nd year CF is already in year 2 so just use $157.7. The 3rd year CF needs to be dicsounted one year to get it into Year 2 - so 224.7/(1.11) = 202.4.
You need a terminal value, so assuming that is in year 3 you'd discount that back one year as well.
Ok,Can I send you a basic spreadsheet with the calculations for a quick check? Thanks
No problem. I'll check with you offline.
whatever methodology you use, it'll be pie in the sky. i'd just run an operating model w/ 3 statements to project net income over the next 3-5 years, and assume share count is the same then as it is today (unless you have info otherwise)...then you can back into share price based on some kind of historical p/e multiple...or you can run the same model and base your share price off an ebitda multiple, then strip out debt and divide by your share count.
What's a good math formula to see whether the price of a stock will go up or down using its financial ratios? (Originally Posted: 10/25/2017)
The stock market is pretty complicated. What is a good math formula using the companies financials statements to determine whether its stock price will go up or down in the short or long term?
if I told you, I'd have to kill you
Master Chart of Historical Prices for Non-Stocks? (Originally Posted: 01/12/2012)
God bless my n00b questions hahahah.
Is there any place where I can look at historical charts for things like agriculture commodities, natural gas, etc. etc. on the same page?
It'd be great if there was this magical site where you can customize settings to view the daily price fluctuations of 6 commodities you follow or yearly fluctuations on the same page. Then you can investigate further.
Sites like http://tfc-charts.w2d.com/ don't currently do this. Does anyone know a site that does?
Also, an EQUIVALENT for economic indicators like unemployment rate, retail sales, export rates, etc. etc.
Sorry if this is terribly ignorant or stupid sounding, as I can google any of these things. However, there's sooooo much to keep track of, it would just be easier if there was a site where I can customize settings and set it to automate :)
Thank you so much for your post.
Stock prices w/o Bloomberg etc (Originally Posted: 12/12/2014)
Hi everyone,
I was wondering if there is a possibility to get daily stock price data from the last couple of years without having access to a Bloomberg terminal etc. I'm doing an Event Study for my bachelor thesis and need data of about 30 stocks plus a couple of reference indexes. My professor can't help me since our university doesn't have Bloomberg. I guess that's the downside of no tuition fees in Germany. The universities are just not well equipped.
Anyway, is there any chance to gather these information without having a longterm subscribtion? Something like an one-day trial version or similar stuff.
I now this is a long shot but I thought I just give it a try.
Any help is highly appreciated!! Thanks WSO
Yahoo finance your best bet
Ah perfect. I didn't know they have daily data. I was able to download some of the data I needed. I hope I find the rest as well. Cheers
Google search brought up this http://eoddata.com/stockquote/NASDAQ/AAPL.htm the "Download Data" section looks promising.
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