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New Feature Added: Valuation Box

If you have been checking out stocks on GuruFocus by looking up any stock ticker, you should notice that we added a valuation box that shows the stock prices relative to a few valuation matrices. For instance, this is the valuation box for Wal-mart (NYSE:WMT):

The valuation box shows the current price of Wal-Mart at $67.59 relative to the following parameters. Put your mouse of the chart to see the values for each parameter.

1. Net Cash of - $26.5 a share
2. Net Current Asset Value (NCAV) of -$18.28 a share
3. Projected FCF of $58.65 a share
4. Graham Number of $38.9 a share
5. Median P/S Value of $76.94
6. Peter Lynch Fair Value of $45.2

7. Prof. Bruce Greenwald's Earnings Power Value - Nov. 2014

The valuation box we display will in no way replace your valuation process of the company, but it gives a rough idea of where the company is traded relative to its value. For instance, from the valuation box above we can see that Wal-Mart is traded slightly above the valuation of the DCF model. It is below the historical median relative to sales. Peter Lynch would think Wal-Mart is overvalued because the earnings growth rate is about 9%; it would only deserve a P/E ratio of 9. But Wal-Mart is currently at a P/E ratio of almost 14.5.

We have discussed in detailed how to achieve each valuation in Methods for Arriving at the Fair Value of Companies. Here is a summary:

Valuation Methods Asset Based Earning Power Based Combination of Asset & Earnings Power Growth Considered Comment
Net Cash X     No Cash & Cash Equivalents + Short Term Investments – Total Liabilities
Net Current Asset Value (NCAV) X     No Cash and Short-Term Investments + (0.75 * Accounts Receivable) + (0.5 * Inventory) - Total Liabilities
Projected FCF     x Yes Value = (Growth Multiple)*FCF(6 year avg) + 0.8*Total Equity(most recent)
Details here
Graham Number     x No SquareRoot of (22.5 * Tangible Book Value * Earnings per share)
Median P/S Value   X   No Historical range traded relative to sales.
Peter Lynch Fair Value   X   Yes 5-Year EBITDA Growth Rate * Earnings per share.


Only applies to companies with consistent growth rate between 8% to 25%. If growth rate is higher than 25%, we use 25%.

Please note that this is different from the value projected in Peter Lynch Chart. In Peter Lynch Chart, the P/E ratio is always 15. But in Peter Lynch Fair Value calculation, P/E ratio is equal to the 5-year average EBITDA growth rate, which can be higher or lower than 15.



Not all parameter will apply. For instance, Peter Lynch's fair value method is only applicable to companies that have relatively consistent growth. The Graham number is only applicable to companies that have positive tangible book value and earnings per share.

Another example is Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B). We can see that Berkshire is also traded at below its historical median P/S ratio, but above its tangible book of $112,198 a share and Graham number of $192,692 a share.

Also see the Apple (NASDAQ:AAPL) valuation box below:

Because of its tremendous growth, Apple is traded above all the valuation parameters such as DCF, tangible book, etc. But Peter Lynch may think it is still undervalued because its growth value is far higher, even if we cap the growth rate at 25% a year, which is far below its actual growth rate.

The valuation box will also clearly indicate it if a company is traded at below its net current asset value (NCAV). 

It is obvious the Chinese wireless network company is currently traded at far below all of its valuation matrix. It is even a Ben Graham Net-Net because it is traded at below its net current asset value.

As discussed in Methods for Arriving at the Fair Value of Companies, a company can be evaluated according to its asset value, its future earnings power, or the combination of both. Please do read its annual/quarter reports to understand more about which will apply.

New: We have added Prof. Bruce Greenwald’s Earnings Power Value as of Nov. 2014. 

Disclosure: The author owns Berkshire Hathaway.

Please let us know how you think about this feature and feel free to give us suggestions.

Rating: 3.3/5 (92 votes)



Aldandrea - 8 years ago    Report SPAM
Great feature, thanks. How about adding those valuation items to the new stock screener? While at it, there are other selection criteria that need to be added to the screener to make it truly useful and competitive. For example, ROIC, Cash/Share, Debt/Share, %Insider Ownership, Price/FCF (this may be there but it is not clear), TangibleBook/Shares, PEG, Unfunded Pension Liability (if it's available), ShareGrowth, Payout%, etc.

I have been able to more or less replicate the Magic Formula in Yahoo's (free) stock screener but cannot do so in the gurufocus.com one.

Please keep adding selection criteria to the screener.


Gurufocus premium member - 8 years ago
Yes, all of these will be added into the All-in-One screener.
Jean-Francois Nobert
Jean-Francois Nobert premium member - 8 years ago
Once again really good work from the gurufocus team :)
Benethridge - 8 years ago    Report SPAM
Nice! Thanks for adding this feature.
Fermon - 8 years ago    Report SPAM
do you plan to add non US stocks (european, emerging markets) on the valuation box?

thank you in advance
Gurufocus premium member - 8 years ago
Yes we will add for international markets.
Yesidher6 - 7 years ago    Report SPAM
Why is there two different values for the Graham number? The one in the valuation box and the one in the definitions are different some times. Can you please explain why. Thank you
Dmuse - 7 years ago    Report SPAM

Why is the Peter Lynch Figure in the valuation box often different from the Peter Lynch chart further down?
Genly Ai
Genly Ai - 7 years ago    Report SPAM

It's been a year. I'm not finding a GAVA number. Is it me or is GAVA dead in the water?

Mythnreality - 6 years ago    Report SPAM

Will you please update Telestone (TSTC) on this page...

Is this a legit company in China still?

After digging further on Telestone, there were informations out there. One of them was the accusation of the CEO's conduct and integrity.

Here's the related links (in Chinese): http://forum.china.com.cn/thread-1526217-1-1.html

King818 - 6 years ago    Report SPAM

Can you add a box showing the restored price of a given ticker after taking the previous splits and cash dividends into account for the past 10 years minimum? Thanks!

Taowave - 5 years ago    Report SPAM

Hi,I am looking at your custom columns in screener.How is it possible that the DCF of FCF is greater than Cash Flow which I am assuming is Operating cash Flow

Gurufocus premium member - 5 years ago

@Taowave, it is better to use real examples to see the details of the calcuations. You can see the details of the calculation in pages like this:

Projected FCF vs. DCF

ZIP - 5 years ago    Report SPAM

Any interest in evaluating buyer interest, = Market Cap / Enterprise Value?

Russ.abbott - 5 years ago    Report SPAM

The example valuation boxes show up as broken images.

Cloudreader - 5 years ago    Report SPAM

Please fix these broken links

B_Gumm - 3 years ago    Report SPAM

Maybe Im wrong; but your comments on each example dont seem to line up. Additionally the statements made about one company's price relative to DCF model seem to contridict each other in each example. Maybe try to explicity break each example down line by line.
Am I the only one that doesnt think the example explanation match up with the images provided?

Dogstarwelding - 2 years ago    Report SPAM


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