Investment Valuation information - what ARE all these figures and what do they mean?

tebbins

Edit: trustnet doesn't have Amazon, but as it has never paid dividends I can use their share price and exchange rate to get:

(134.52÷1.6148) ÷ (76.13÷1.6121) -1 =76.4%

Less than Tesco, at least over that period.

There will always be - much easier to find in hindsight - the odd few who do actually make it through their technological revolution. Good luck finding them.



Source: https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.vanguardinvestments.dk/documents/institutional/increase-odds-of-owning-less-stock-that-drive-returns.pdf&ved=2ahUKEwjXxc-h2fnyAhVinFwKHThsAyoQFnoECAQQAQ&usg=AOvVaw2xzbnhbJiJPf3q8PdL-YRF

Bobziz

Didn't Amazon also drop more than 95% in 2001 ? Brave to hold onto that one at the time.

Thrugelmir

Bobziz said:

Didn't Amazon also drop more than 95% in 2001 ? Brave to hold onto that one at the time.

Very different business back then. 

MaxiRobriguez

Sea_Shell said:

Good Afternoon all.

I have a question.   Sorry if it's a rookie one.  Take the following funds factsheet...

Rathbone Global Opportunities Fund S Acc Portfolio Overview | GB00BH0P2M97 | Fidelity

What do all the figures under the "Valuation" heading actually mean or represent??

Price/Earnings
Price/Sales
Price/Book
Price/Cash Flow

Are high numbers good or bad?   Are they a percentage, if so what of?   

They are all higher than the benchmark...is this good?

The rest of the information seems fairly self explanatory, but I've never understood these figures.



(Which I should really, as we've got 6 figures with them!!!!! )

You want lower numbers for these things. They all infer the price you pay for some reflection of the asset quality. The less you are able to pay the better the investment case.

But low does not mean a specific number and it is not straight forward to compare two companies with these ratios. For example Imperial Brands has a Price/Earnings ratio of 5 currently, whereas Unilever has a PE ratio of 22. Is Imperial Brands a better deal than Unilever? Impossible to say because it's a completely different industry with a different business case and different future prospects. It might be cheaper today, but those ratios can rapidly change. Imperial Brands are in an industry that could well be further regulated over the next decade which impacts their earnings and pushes up their PE ratio.

All these metrics are backwards looking and value a business with hindsight. That gives you precious little to make an informed choice about whether the future investment case is worthwhile.

Sea_Shell

Well, we've bitten the bullet and stuck another £15k in.     Only time will tell if this was the right choice or not!!!

It was what we'd already decided to do, before I started querying what the numbers meant.

Thrugelmir

Sea_Shell said:

Well, we've bitten the bullet and stuck another £15k in.     Only time will tell if this was the right choice or not!!!

It was what we'd already decided to do, before I started querying what the numbers meant.

Just the one fund. Rather than spreading your money over 2 or 3? 

Sea_Shell

Thrugelmir said:

Sea_Shell said:

Well, we've bitten the bullet and stuck another £15k in.     Only time will tell if this was the right choice or not!!!

It was what we'd already decided to do, before I started querying what the numbers meant.

Just the one fund. Rather than spreading your money over 2 or 3? 

We are still contributing to our pensions, and we have another ISA fund at lower equity level, plus cash.

This keeps us at roughly a 60% equity allocation, across our whole pot.

So it's not a case of all eggs in one basket.