In an initial public offering, the share price calculation is set based on the company’s performance and net present value. Via the primary market, firm stocks are first issued to the general public in an Initial Public Offering (IPO) to collect money to meet financial needs. How to calculate share price formula in IPO Now you completely understand how to calculate stock price. These are the major share price calculation formula. On this premise, a share of Heromoto trading at 2465 is undervalued in comparison to its intrinsic value as determined by the dividend discount calculation. When Dividend Discount formula is applied to heromoto, the dividend growth rate is anticipated to be 7%, and the shareholders rate of return is estimated to be 11%: Graham Number = Square root of (18.53 x 1.5(148.39) x 1840.79) = 2755 = Maximum intrinsic valueīased on this, Heromoto’s current share price of 2465 is undervalued when compared to its Graham number of 2755. When Benjamin Graham share price calculation formula is used to Heromoto, the Graham number is as follows: If earnings are predicted to rise, the estimated share price will rise even more. This calculation estimates that the Heromoto’ earnings per share will remain unchanged in the coming year. This undervaluation may attract the interest of potential acquirers, and analysts may advise their customers to buy the shares. On this share price calculation criteria of, Heromoto’s present stock price is undervalued. The present stock price should be 18 times its historical P/E ratio if it were trading at its historical P/E ratio of 18. Let’s suppose Heromoto’s P/E ratio has been 18.53 in the past 2465 divided by 148.39 = 16.6 times the current P/E ratio.
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