|
|
Frequently Asked Questions
What differentiates ValuePrime from other
financial stock analysis sites?
What makes ValuePrime unique is the methodology
it uses to forecast stock performance. Because
of the way they are constructed,
financial statements do not correctly reflect
a firm's financial conditions. ValuePrime uses
each company's financial statements, including
footnotes, to correct financial statement
misclassifications of research and development
(R&D)
and operating lease expenses by treating R&D operating expenses
as capital expenses, and converting long-term
operating lease obligations to debt.
These corrected data are then used to forecast
a realistic free cash flow and revenue growth
numbers.
Which parameters are used
for stock valuations?
ValuePrime examines over 140
current and historical parameters
to come-up with fair market value and ratings
for each stock. Some of the key parameters are:
EPS, EPS growth forecast, revenue, revenue growth
forecast, risk-free rate, risk premium, R&D expenses,
long-term operating lease commitments, depreciation
and capital expenditures.
Our
analysis is based on discounted cash flow (DCF),
relative valuations and other proprietary techniques.
How do you use these parameters to
estimate fair market value and ratings
for each stock?
Please read our stock analysis
methodology.
Do you use different models for different
industries?
Yes, ValuePrime
has developed distinct valuation models to address
different industries. These models take into
consideration the special characteristics of
each industry (e.g., cyclically or the nature
of debt for financial industry).
What does the Overall Stock Rating
signify?
This rating shows the stock's overall long-term
outlook. This rating is based
on the stock's long-term price appreciation potential,
risk, long-term growth potential, and
relative strength compared to S&P and other factors.
Overall Ratings range from "F" (very poor) to "A" (excellent).
About 5% of the stocks in our database
earn an "A" rating.
What does the Valuation Rating signify?
This rating gives an
indication of stocks's long-term price
appreciation potential. It is calculated
based on company's intrinsic and relative
valuation results. A very high or high
value rating indicates that both intrinsic
and relative valuations point to attractiveness
of the stock. In this case, the stock
is attractive both when we consider company
fundamentals (and ignore other firms
in the same industry), and when we consider
other firms in the same industry (but
ignore company fundamentals). Conversely,
A very low or low Value Rating shows
that both intrinsic and relative valuations
point to the unattractiveness of the
stock. In this case, the stock is unattractive
both when we consider the company fundamentals
(and ignore other firms in the same industry),
and when we consider other firms in the
same industry (but ignore company fundamentals).
What does the Risk Rating signify?
This
rating gives an indication of stocks's long-term
risk. It is calculated based on a number
of factors, including stock's average return
and volatility over the recent 3 years, and a combination of other
factors. A stock with a low risk rating, for
example, would indicate that it is safer and
more predictable than a stock with a higher risk
rating.
What does the Momentum Rating signify?
This
rating shows stock's long-term growth potential
and dynamics. It is calculated based on
factors such as stock's average annual earnings
growth over the last year and over the recent
3 years, stock's average annual sales growth
over the last year and over the recent 3 years,
stock's price movements over the recent 26 and
52 weeks, and a number of other factors. A stock
with a high growth rating, for example, would
indicate that the stock's growth momentum is
strong and positive over the long-term.
Do stocks that are undervalued always get a better Overall Rating that stocks that are overvalued?
Not necessarily. It is quit
possible for a stock to be overvalued, but have a high Overall
Rating. It is also possible for a stock to be undervalued,
but have a low Overall Rating. This is because
the Overall Rating system also examines other
factors such as risk and long-term growth potential
for the stock. It is therefore recommended to
look at all five ratings (overall, financial strength, risk, valuation
and momentum) before drawing any conclusions.
Should I buy or sell stocks based
on the analysis provided by ValuePrime?
Please read
our DISCLAIMER carefully
before using ValuePrime. The information on this
site is generic and does not represent a recommendation
to buy or sell stocks. You should seek the advice
of a qualified investment professional prior
to making any investment decisions.
|
