Approaches to common stock valuation

Bc. Artur Akhmerov

Diplomová práce

Abstract:

This diploma thesis devoted to examining of chosen approaches to common stock valuation on the example of selected companies of FANG group from the tech sector, including Facebook, Amazon, Netflix and Alphabet (Google), whose securities are traded in National Association of Securities Dealers Automated Quotation (NASDAQ) and included in Standard & Poor’s 500 stock index. In other words, this research is aimed to discover whether underlying values of selected shares are undervalued or overvalued compared to market prices. The main goal of this work is to value equity stocks through absolute and relative valuation model and establish a degree of applicability of chosen methods. The work is divided into two parts: theoretical and practical. The first part is represented by literature review of crucial aspect of investment process and some chosen valuation models. The second part is based on providing three-step approach of fundamental analysis, where the whole economy, sector and FANG equities are analyzed. Last but not least, valuation techniques, discussed in theoretical part, are applied for selected stocks and intrinsic value are compared to current market prices of shares. Data for analytical part is taken from “Morningstar” global financial service and represents a 10-year period (2011-2020). Financial reports such as balance sheets, income and cash flow statements are used as a secondary source of quantitative data. In conclusion, final results of this work are supported by discussions, explanations and recommendations of potential investment decisions.

Keywords

Fundamental analysis, Common stock, Market value, Intrinsic value, Stock valuation

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 30. 3. 2021

Obhajoba závěrečné práce

• Vedoucí: Ing. Pavel Srbek, Ph.D.

Česká zemědělská univerzita v Praze

Provozně ekonomická fakulta

Magisterský studijní program / obor:
Economics and Management / Economics and Management