Stock Valuation
1. Introduction
2.1 Background of the Studies
Valuation is the first step toward intelligent investing. When an investor attempts to determine the worth of her shares based on the fundamentals, it helps her make informed decisions about what stocks to buy or sell. Without fundamental value, one is set adrift in a sea of random short-term price movements and gut feelings.
Before we can value a share of stock, we have to have some notion of what a share of stock is. A share of stock is not some magical creation that ebbs and flows like the tide; rather, it is the concrete representation of partial ownership of a publicly traded company. If XYZ Corporation has 1 million shares of stock outstanding and we hold a single, solitary share, that means we own a millionth of the company. There are some stock valuation methods that we can use in valuing company’s stock. For instance: Discounted Cash Flow Model (DCFM), Dividend Discount Model (DDM) and Earnings Growth Model (EGM).DDM is the valuation method that we use in this paper.
2.2 Problem Statement and Objective
This research is mainly to value Public Bank Bhd stock through Dividend Discount Model (DDM).
2.3 Research Question
* What is the value of Public Bank Bhd stock? * Is Public Bank Bhd stock a worth enough stock for investor to invest in?
2.4 Significance of the Studies
The significance of the studies is to value Public Bank Bhd stock. The result that we generate in the end of the research can help the investors in making their decisions either to invest in Public Bank Bhd or not.
2.5 Limitation of the Studies
The Dividend Discount Model is a simple and convenient way of valuing stocks but it is extremely sensitive to the inputs for the growth rate. Used incorrectly, it can yield misleading or even absurd results, since, as the growth rate converges on the discount rate, the value goes to infinity.
2. Literature Review
2.1 Background of the Studies
Valuation is the first step toward intelligent investing. When an investor attempts to determine the worth of her shares based on the fundamentals, it helps her make informed decisions about what stocks to buy or sell. Without fundamental value, one is set adrift in a sea of random short-term price movements and gut feelings.
Before we can value a share of stock, we have to have some notion of what a share of stock is. A share of stock is not some magical creation that ebbs and flows like the tide; rather, it is the concrete representation of partial ownership of a publicly traded company. If XYZ Corporation has 1 million shares of stock outstanding and we hold a single, solitary share, that means we own a millionth of the company. There are some stock valuation methods that we can use in valuing company’s stock. For instance: Discounted Cash Flow Model (DCFM), Dividend Discount Model (DDM) and Earnings Growth Model (EGM).DDM is the valuation method that we use in this paper.
2.2 Problem Statement and Objective
This research is mainly to value Public Bank Bhd stock through Dividend Discount Model (DDM).
2.3 Research Question
* What is the value of Public Bank Bhd stock? * Is Public Bank Bhd stock a worth enough stock for investor to invest in?
2.4 Significance of the Studies
The significance of the studies is to value Public Bank Bhd stock. The result that we generate in the end of the research can help the investors in making their decisions either to invest in Public Bank Bhd or not.
2.5 Limitation of the Studies
The Dividend Discount Model is a simple and convenient way of valuing stocks but it is extremely sensitive to the inputs for the growth rate. Used incorrectly, it can yield misleading or even absurd results, since, as the growth rate converges on the discount rate, the value goes to infinity.
2. Literature Review