I'm trying to understand the question. How does P/E tell you the upside in 3 years? As in assuming constant PE and multiplying it by future earnings? The problem with that is the multiple itself depends on future growth prospects which is likely different in 3 years
The thought process here is that you will do your research and build out your DCF using your research-based assumptions to forecast the financials. If your thesis supported a catalyst to occur within the next 3 years, you would use your year 3 projections as your time horizon where you would have already forecasted scenario-based EPS. Therefore, as you mentioned, you assume constant P/E to calculate target price (can always adjust given any earnings surprises). You use your DCF's present value and compare it to the P/E multiple stock price to find estimate appreciation over a 3 year period.
I wanted to know if there is a better way of identifying a longer term price target and upside estimates for a 3-5 year time horizon.
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Bump. This would be helpful for a name I am currently researching.
Bump round 2.
Part 3.
I'm trying to understand the question. How does P/E tell you the upside in 3 years? As in assuming constant PE and multiplying it by future earnings? The problem with that is the multiple itself depends on future growth prospects which is likely different in 3 years
The thought process here is that you will do your research and build out your DCF using your research-based assumptions to forecast the financials. If your thesis supported a catalyst to occur within the next 3 years, you would use your year 3 projections as your time horizon where you would have already forecasted scenario-based EPS. Therefore, as you mentioned, you assume constant P/E to calculate target price (can always adjust given any earnings surprises). You use your DCF's present value and compare it to the P/E multiple stock price to find estimate appreciation over a 3 year period.
I wanted to know if there is a better way of identifying a longer term price target and upside estimates for a 3-5 year time horizon.
Tempora earum similique fuga consequatur hic. Fuga facilis hic debitis est aut dolore qui.
Qui temporibus molestiae ea fugit. Ducimus laudantium et reiciendis quidem. Porro suscipit saepe vitae ipsum quia. Qui ipsa quae facilis soluta consequatur eum quia. Impedit voluptas sunt impedit perferendis atque sit. Maxime et impedit accusamus fuga illo consectetur. Et incidunt omnis voluptatem quos.
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