Why is ProThinker able to add value to Company Research?
ProThinker provides stock valuation that is objective, accurate and verifiable.
Objective – Valuations carried out by analysts may have upward bias because of the fear of offending the management of listed companies. Since our reports are quantitative-based, we are able to provide you with reports that are objective.
Accurate – It is possible to value stocks based on different methods. For example, stocks could be valued based on their earnings, sales, cash flows, book values or dividends. However, valuing a stock by different methods will give you different values. Take for example Apple Inc. These are the different values of the stock based on different methods.
Depending on which method you choose, Apple’s stock could be grossly undervalued or overvalued. The range of values is too wide to be useful for investors.
ProThinker also uses multiple methods to value a stock. However, instead of giving you many values, we test all the different combination of indicators and give you the one combination that best explains the stock price. Usually, no single indicator can explain a stock price sufficiently. For example, some investors may look at a particular stock’s Price to Earnings while some may look at Dividend Yield. Therefore, a stock’s price is often affected by different indicators at the same time. Rather than guessing which indicators explain the stock price, we let the data find the combination of indicators that mathematically explains the stock price best. This combination approach almost always explains the stock price better than any single indicator.
Verifiable – When valuation indicators are used by itself rather than in combination, different values arise, and investors are forced to choose which indicator to use, often without back-testing to make sure that the indicator they choose has explained the stock price well. We plot our chosen composite indicator together with the past stock prices so that you can verify the accuracy for yourself.
To illustrate, the Composite Valuation Indicator for Apple’s stock is plotted below. Anyone looking at this chart can see how effective the Composite Valuation Indicator has been in explaining past stock prices and therefore can have the confidence to rely on it to predict future prices.
How is ProThinker able to add value to Company Research?
Research departments of stockbroking companies carry out qualitative analysis on companies. Being human, it is difficult to avoid biases in our valuation. For example, analysts may be afraid of coming up with low stock valuations and sell recommendations for fear of offending the management of listed companies. Our quantitative reports are totally objective because they have no human input and we are not affiliated to any investment bank. Therefore, our reports serve as a good independent check to the conclusions drawn by your own analysts. Even if you do your own quantitative analysis, our unique stock valuation methodology, which combines various valuation indicators to choose the one with the best explanatory power, can provide new insights to your stock research process.
Furthermore, our reports do not just cover stock valuation, it is a comprehensive report that analyzes all the pertinent aspects of a stock such as:
- Return on Equity
- Quality of Earnings
- Piotroski Score
- Altman Z-Score
- Cash Flow Analysis
- Technical Analysis
We can customize our analysis to your preference for you to include in your own qualitative research reports.
Our reports can also add value to research companies that are providing country reports, sector reports, company reports, etc. for non-listed companies. Our research allows you to provide another type of report that you may not have focused on – analysis of listed companies. This could open the door for you to penetrate the vast industry of stockbroking, asset management and wealth management.
Use the search box on the right to search for examples of partial analysis on stocks (e.g. key “India” into the search box). If you want to see the full report, please fill in the request form below.