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.
Not only does the report cover stock valuation, it analyzes every aspect of the company on a quantitative basis such as:
- Quality of Earnings
- Operational Efficiency
- Financial Condition
- Cash Flow