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Journal of Competitiveness

The Use of Indicators in Modified Historical Model to Estimate the Intrinsic Value of a Stock

Gottwald Radim

Keywords:
historical model, intrinsic value of a stock, stock valuation

Abstract:
The article mentions several methods of a fundamental analysis used to value stocks. It primarily focuses on the historical model. This model enables undervalued, correctly valued and overvalued stocks to be identified. The model is further modified in the article, using selected accounting indicators. The modified model versions are applied to selected stocks in the SPAD segment, Prague Stock Exchange, within the 2005-2010 period. Empirical analysis is applied to a comparison of accuracy of the accounting indicator value estimates and accuracy of stock intrinsic value estimates, both separately for each stock and accounting indicator. The comparisons of accuracy of the accounting indicator value estimates and the accuracy of the stock intrinsic value estimates are also done based on the length of applied time period. With respect to the obvious fierce competition between stock issuers within the financial markets, the model enables potential investors, who are to select from an extensive offer of stocks, to make better informed investment decisions.

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The Use of Indicators in Modified Historical Model to Estimate the Intrinsic Value of a Stock [PDF file] [Filesize: 844.13 KB]

10.7441/joc.2012.02.07


Gottwald, R.(2012). The Use of Indicators in Modified Historical Model to Estimate the Intrinsic Value of a Stock. Journal of Competitiveness, 4 (2), 97-110. https://doi.org/10.7441/joc.2012.02.07

Journal of Competitiveness

  

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ISSN 1804-171X (Print); eISSN 1804-1728 (On-line)


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