"Valuation Analysis" selects relative valuation indicators "price-earnings ratio, price-to-book ratio, and price-to-sales ratio", observes the change and location of the valuation of the target itself over some time, and compares it with the valuation of the industry in which the target is located. Get the current valuation status of the target and provide a reference for investors.
1.How to use valuation analysis
Select a valuation indicator, and observe the changing trend of this indicator over a while and the valuation range it is in. We provide two common evaluation criteria on the market, "Percentile and Standard Deviation".
1) Evaluation Criteria - Percentiles
The 80% position of the indicator data samples in the selected interval is the overestimation threshold, the 50% position is the median threshold, and the 20% position is the underestimation threshold.
Example: In the past five years, the price-earnings ratio of the target was in the high valuation area from October 2017 to July 2018. That is, the price-earnings ratio of the target during this period was higher than 80% of the price-earnings ratio of the past five years, which was overvalued; And in the low valuation zone from March 2021 to March 2022, that is, the underlying price-earnings ratio during this period is lower than 20% of the price-earnings ratio in the past five years, which is an undervalued state.
2）Evaluation Criteria - Standard Deviation
For the indicator data samples in the selected interval, +1 standard deviation is the overestimation threshold, and -1 standard deviation is the underestimation threshold.
Example: In the past three years of the target, the price-earnings ratio was in the high valuation area from November 2019 to July 2020, that is, the target's price-earnings ratio during this period was higher than the +1 standard deviation of the price-earnings ratio in the past three years, which belongs to the subject. Overvalued; while in the low valuation area from August 2021 to March 2022, that is, the underlying price-earnings ratio during this period is lower than the -1 standard deviation of the price-earnings ratio in the past three years, which is undervalued status.
3）Net Profit
By comparing the net profit growth of the target company with the market value growth of the target company during the selected period, the current premium of the target company can be obtained.
If the market value growth of the target company is much greater than the net profit growth during the selected period, the target may have a higher premium.
If during the selected period, the growth of the market value of the target company is greater than but not significantly greater than the growth of net profit, the target may have a certain premium.
If within the selected period, the difference between the growth rate of the market value of the target company and the growth rate of net profit is small, the target may have a small premium.
Example: In the past five years, the market value of the target company has decreased by 43.12%, and the net profit has decreased by 1.98% . That is, the decrease in market value is much greater than the decrease in net profit, and the target may now have a discount.
4）Valuation Comparison
The current valuation status of the target is analyzed by comparing the valuation of the target with the industry valuation within the selected period and calculating the industry ranking of the relevant valuation of the target.
Example：In the past five years, the price-earnings ratio of the target is compared with the industry average price-earnings ratio as shown in the figure. The price-earnings ratio of the target ranks 67th among the 78 targets in the industry. (Sort by the valuation value from small to large, with the smallest value ranking first)
2.Feature Navigation
1）Market - specific target - analysis (pull down) - valuation analysis
2）Quotes-US Market/Hong Kong Market-Valuation Analysis
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