Approaches to common stock valuation

Rakhimjan Jarylgapov

Master's thesis

Abstract:

In this thesis, a study of absolute and relative valuation methods of ordinary shares is conducted on the practical valuation of shares of six companies representing the technology sector and the consumer goods sector. Three companies from the technology sector represent Intel, Qualcomm and Oracle, while Coca-Cola, Procter & Gamble and Estee Lauder companies, represents the consumer goods sector. The main purpose of this approach is to establish the fair value of the shares of each of the companies. The thesis consists of two parts: a literary review of the existing literature on the research topic, and a practical part with the application of selected fundamental approaches to the valuation of common shares. The practical part consists of a three-stage approach to valuation, including a macroeconomic overview of the current state of the economy, an overview of the sectors to which the selected companies belong, as well as an absolute and relative valuation of stocks. Absolute valuation includes three discount models, namely: Discounted Dividend Model, Free Cash Flow to Equity Model and Free Cash Flow to Firm model. The results of the study obtained during the calculations are described and analysed in the Results and discussion section.

Keywords

Stock, stock market, Stock valuation, Fundamental analysis

Language used: English

Date on which the thesis was submitted / produced: 1. 4. 2022

Thesis defence

• Supervisor: Ing. Pavel Srbek, Ph.D.

Czech University of Life Sciences Prague

Faculty of Economics and Management

Master programme / field:
Economics and Management / Economics and Management