Tag Archives: Stockcalc

Dow 30 Stocks Price vs Valuation – April 2021

Are the markets becoming overvalued? Using StockCalc.com we ran the DOW 30 to look at Price versus valuation and currently we see 18 DOW 30 Stocks at or above fair value.

At StockCalc each day we run fundamental valuation models on 8000 Stocks (Canada, USA – TSE, NYS, NAS). I wanted to share this graph to show the valuations we have for the list of DOW 30 stocks currently. As you would expect a lot of DOW 30 stocks are close to fair value with the note the majority are now showing fully to overvalued, the strongest overvaluation we have seen in a while.

Website is StockCalc.com

DOW 30 Price v Value

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The content presented here is in part from the website stockcalc.com and is provided on an as is or as available basis with all faults and may not be current in all cases. You should not rely on any of the information as authoritative or as a substitute for the exercise of your own skill and judgment in making an investment decision.

How sensitive are companies to rising interest rates?

The talk of will they or won’t they raise rates has been ongoing for more than 2 years now.  We have to expect either rates get raised at some point, we stumble along on the current path or we end up in deflationary times.  I want to explore the more optimistic of these scenarios and its impact on stock valuations: the economy improves and rates start to rise.

To look at this in detail I am using www.stockcalc.com  (Disclaimer: I am the President of Patchell Brook Equity Analytics and we created Stockcalc.com precisely for this type of analysis and valuation)

I will examine Caterpillar as it has with a 59/41 Equity to Debt in the Capital Structure

Using Stockcalc I first create and save a WACC for CAT:  (Research Menu, Valuation, WACC).  Stockcalc does a first pass on WACC using default values which results in a WACC of 8.93.

Cost of Equity (Ke) 13.63 (Using CAPM), After Tax cost of Debt : 2.17, 59% Equity, 41% Debt

 

WACC for CAT

Next I load the Quick DCF tool  so I can run the analysis (Research, Forecast, Analyst) (Note – the quick DCF is a testing and teaching tool, the other tools are more detailed in their analysis)

It is available for free at www.stockcalc.com/dcf.aspx or inside the Stockcalc.Com website

Quick DCF for CAT

Value Per Share ($) Calculations for Caterpillar (CAT:NYS) using the Quick DCF tool on Stockcalc.com

Each change in WACC (8.93 – 9.34 – 9.75) implies a 1 % change in Cost of Debt.  Growth rates are next 3 years and thereafter (5% and 3% in the first row for ex)

WACC 8.93 9.34 9.75
Growth rates 5,3% 70.02 61.28 53.60
Growth rates 6,4% 97.40 84.92 74.21
Growth rates 4,2% 50.55 44.08 38.30

(Current Price at the time of valuation (October 2015) was $69.34)

A 1% change in the Cost of Debt results in a 12.5% change in value per share.  A 1% change in Growth rates results in a 28% change in Value per Share.  A 1% change in WACC results in a similar 28% change in Value per Share.

Message: if interest rates are rising, growth prospects need to be rising at half the rate to keep this share price holding steady.

 

If you want to explore the Stockcalc software simply create an account at www.stockcalc.com and have a look around.  Use the walk-throughs (click the walking man icon), videos (video icon on each page) and  help menu to understand and navigate the site.  The site contains a number of tools including screens, queries, backtests, forecasts and a variety of valuation methods.