FAQ

Always keep in mind; calculating intrinsic (true) value is not an exact science. The calculations act as a guide, not a precise road map.

Our stock price calculator evaluates the true value of a stock according to the financial data with approx. 90-100% accuracy. But the prices of the stocks may be different than their true values because of market and other conditions. Sometimes shares can be traded with their 2 to 3 years later prices, or traded with their 1 year before prices according to the market conditions, financial situation and political conditions of the country. But our stock price calculator is capable of calculating the stocks’ with a few years later estimated values according to these market conditions as well.

As Warren Buffett says...It's better to be approximately right than precisely wrong."

You need to remember that, calculating a stock's intrinsic (true) value is an estimating job. So as a precaution, give yourself a little room for error, give yourself a little bit of leeway in case something goes wrong.

In financial circles, this idea is known as the margin of safety. You have to provide yourself a margin of safety. As an investor, you are free to either agree with its quoted price and trade with it, or to ignore it completely.

As every investor will inevitably ask; which stocks should they be buying? An investor needs to know which stocks will make them money and return healthy revenue. Moreover, an investor has to know how to value stocks. In short, an investor has to aim at those stock prices that have a lower value – that is a lower value than the intrinsic value (true price) so that investment will eventually become a profit making money spinner.

The Dr. Stocks stock value calculator will be the key to helping you find those stock values that are priced lower than they really should be as it searches key information about a company that could well determine a healthy boost in its stock prices in the months to come. The valuations are not just some wild guess or forecast but take into consideration a number of factors which include liquid assets, future debts or revenue earners and any prospect of a takeover or a deal in the pipeline within that business that could (and should) adversely affect the company's stock price.

So, finding and then buying stocks with lower current market values than the calculated intrinsic value, is exactly what you must be aiming for. It doesn't matter which commodity you decide to invest in, as long as the principle prospect for profit equates to that formula then that is where you should be aiming.

The present or current stock price is the price you would pay today, or right now for your stock. Intrinsic value is the value that includes any future and expected incoming cash or revenues expected into that company. In truth, the intrinsic value is the real value of a company and not the current value, so investing in a stock that has a present value that is much lower than its intrinsic value will reap the revenue you are so longing to find.

Likewise, if you see a present value that is the same as the intrinsic value, or even higher than it, then you must avoid investing in these stocks, else you will surely make a loss or at best break even.

But don't just go for the first stock you find that has a lower present value than the intrinsic value. The reason you should do this is because later down the line you will more likely find a much better deal with a stock price that has a far greater difference in its present value versus its intrinsic value.

The intrinsic value of stocks is the one where the actual value of your stocks is determined. However, it does not take into consideration the current market price. Sometimes the intrinsic value is termed as the fundamental value. The calculation that determine this intrinsic value are attained by working out any future income that company is likely to encounter or if there are any court or revenue issues pending against that company.

The figure can be increased against the current market value or subsequently decreased depending on the pending economic forecast of the company in question. When a stock price calculator works out the true value of a stock and where it may well be in the future it can take into consideration intangible and tangible factors that could directly affect the performance of a company.

For example, one company may have stock on the market valued at say $1 per share. The stock price calculator will then look at the tangible and intangible factors that could directly affect this company and it could determine that a buy out (hostile or non hostile) is looming in the wings. This could mean that the stock price is going to have a true value very different from its market current value, simply because these future factors will have a very real effect on the future price.

The calculations are not like looking into some crystal ball, rather like looking in a mirror that displays the future. Previously, companies that are about to undergo many changes traditionally see its stock prices rise or fall subsequently. If the calculations can see this future event pending then it will forecast the likelihood of the stock price after this event has occurred.

Savvy investors that usually dabble in the value markets use many different techniques to determine what the intrinsic value of a company's securities are in the hope of finding investments where the intrinsic or true fundamental value exceeds the current market value.

Value investors and calculators will also take into consideration qualitative and quantative measures in order to get the figure calculated as close as possible to the real value. Market factors, how a company is being run, its business model and its targets are all looked at by value investors that need to know that they are going to get the true intrinsic value of that stock.

You will evaluate our stock price calculator for ten share price analyses. But you may log in to your account for one year period. Once you’ve concluded that our system is working perfectly, if you desire to continue using the service, you may request more credits from us. We will be glad to provide you with more credits to assist you. One credit will allow you to conduct analyses of one stock. By the analyses of a number of share prices, you may find lower valued shares and earn thousands of dollars easily. Also before acting on others’ advices, you may analyze your investment decision in the process.

You will reconsider your past stock evaluation records for one year.


You have to use the following financial data of the stocks:

EPS(Earning per share),

P/E(Price to earnings ratio)

ROE (Return on equity)

Dividends

Year (If you entered to the system as 1 year, system gives you the true value of the stock within this year. The market price may reach its true value before 1 year too. Normally we advise you to enter 1 year to the system and try to find the stocks true values according to this year estimated values. For the stocks of some big trustable companies, you may see that, these stocks are trading over the 2 or 3 years later estimated prices.)

You may easily find these financial data of the companies via internet as free of charge.

http://www.reuters.com

http://www.bloomberg.com 

http://finance.yahoo.com


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    Earnings per share (EPS) are the amount of earnings per each outstanding share of a company's stock.

    Calculating EPS

    Earnings per Share (Basic Formula)

    When you register with Dr. Stocks Stock Price Calculator you will find there is a grace period where you will be restricted, albeit slightly, to some of the things you can do. You will be able to use the stock price calculator to evaluate ten share price analyses. However, you will be able to log in to your account for a period of up to 12 months, regardless of whether you have used up your entire ten share price calculations or not.

    Once you are satisfied that the system is working for you, and you are happy that the stock price calculations you chose are yielding positive results, you may request more credits which will allow you to use the service further and open up opportunities to make further profits from your stock price calculations. At Dr. Stocks we will be more than pleased to grant you more credits the moment you have asked for them.

    If you buy just one credit, it will give you access to one analyze one stock. It will be during your grace period that you will analyze a number of share prices and in doing so you will find a number of shares and stocks that are deemed to be underpriced or are too low-priced. By taking advantages of these stocks that appear to be undervalued (against the intrinsic value) you could find you are making hundreds, if not thousands of dollars in profit.

    We use an enhanced share price analyzing modeling for our stock price calculator. Similar models are frequently used by professionals in the field. When you enter a few financial data to our calculation system, it automatically calculates the intrinsic (true) value of the stock, according to our stock evaluation modeling system.

    Dr.Stock's Stock Price Calculator will help you to analyze the stock prices in a minute (instantly) and assist you to find out the best stocks to invest in. It is so simple… All you have to do is, to enter a few financial values to Dr. Stock's Stock Price Calculator calculation tool. Our system will do the rest for you… (You may easily reach to the financial data via internet pages of Reuters, Bloomberg, Yahoo Finance, etc.)

    We submit Dr.Stock's Stock Price Calculator to your evaluation as free of charge, in order to show you, how accurate our true share value calculations are. If you find a 5% lower valued stock than the true price, your profit will be 5% over the money you intend to invest. Most likely, the market prices may reach to their true prices within one month after quarterly financial announcements of the companies. Because professionals evaluate the stocks with similar but more sophisticated methods and they reach to the same results within a few weeks or a month. If you act faster than other investors, you may catch the lower valued stocks with lower prices and earn more money than other investors.

    You may watch our tutorial video to have better idea on how our system works.

    Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the common share owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. ROEs between 15% and 20% are generally considered good.

    Essentially, ROE will equal the net margin multiplied by asset turnover multiplied by financial leverage. Splitting return on equity into three parts makes it easier to understand changes in ROE over time. For example, if the net margin increases, every sale brings in more money, resulting in a higher overall ROE. Similarly, if the asset turnover increases, the firm generates more sales for every unit of assets owned, again resulting in a higher overall ROE. Finally, increasing financial leverage means that the firm uses more debt financing relative to equity financing. Interest payments to creditors are tax deductible, but dividend payments to shareholders are not. Thus, a higher proportion of debt in the firm's capital structure leads to higher ROE. Financial leverage benefits diminish as the risk of defaulting on interest payments increases. So if the firm takes on too much debt, the cost of debt rises as creditors demand a higher risk premium, and ROE decreases.[3] Increased debt will make a positive contribution to a firm's ROE only if the matching Return on assets (ROA) of that debt exceeds the interest rate on the debt.

    ROE is equal to a fiscal year's net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage. As with many financial ratios, ROE is best used to compare companies in the same industry.

    High ROE yields no immediate benefit. Since stock prices are most strongly determined by earnings per share (EPS), you will be paying twice as much (in Price/Book terms) for a 20% ROE company as for a 10% ROE company.

    The benefit comes from the earnings reinvested in the company at a high ROE rate, which in turn gives the company a high growth rate. The benefit can also come as a dividend on common shares or as a combination of dividends and reinvestment in the company. ROE is presumably irrelevant if the earnings are not reinvested.

    The sustainable growth model shows us that when firms pay dividends, earnings growth lowers. If the dividend payout is 20%, the growth expected will be only 80% of the ROE rate.

    The growth rate will be lower if the earnings are used to buy back shares. If the shares are bought at a multiple of book value (say 3 times book), the incremental earnings returns will be only 'that fraction' of ROE (ROE/3).

    New investments may not be as profitable as the existing business. Ask "what is the company doing with its earnings?"

    Remember that ROE is calculated from the company's perspective, on the company as a whole. Since much financial manipulation is accomplished with new share issues and buyback, always recalculate on a 'per share' basis, i.e., earnings per share/book value per share.


    Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be distributed to shareholders. There are two ways to distribute cash to shareholders: share repurchases or dividends. Many corporations retain a portion of their earnings and pay the remainder as a dividend.

    A dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of after tax profits among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the shareholder equity section in the company's balance sheet - the same as its issued share capital. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from the fixed schedule dividends.

    Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense.

    Dividends are usually paid in the form of cash, store credits (common among retail consumers' cooperatives) and shares in the company (either newly created shares or existing shares bought in the market.) Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder.