Equity Valuation: A Simple Way to Invest

by Britt Andros

This piece will simulate the valuation of a private equity or stock from the perception of a long-bias investment stance. We will first overview the simple process and then divulge into the actual valuation on a stock. Simply put, we will grow the company at the anticipated growth rates then discount the value by our required return and an additional margin of safety. This will arrive us at a purchasing price representing the maximum amount we are willing to pay for the individual equity. These ideas and strategies are drawn out in literary works such as On Valuation, The Intelligent Investor, Rule One Investing, along with many other sources.

6 pages, Kindle Edition

First published August 6, 2013