Valuation of the Shares of the Companies

Running Head: Valuation of the shares of the Companies
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Valuation of the shares of the Companies

Financial Analysis of the Companies 1
Executive Summary
In this report, share price valuation methods and technique have been used to evaluate
the market value of the companies. By using the different valuation methods, share price
calculated by one value method could be analyzed by using other valuation method. In this
report valuation theory of the Warren Buffet and other valuation methods have been taken
into consideration. Investors will be inclined to invest only in those companies in which they
will have higher return and less risk.

Financial Analysis of the Companies 2
Table of Contents
Executive Summary..................................................................................................... 1
Introduction............................................................................................................... 3
Task 1...................................................................................................................... 4
Answer to question no-1............................................................................................... 4
Use of equity valuation method.................................................................................... 4
Dividend Discount Model............................................................................................. 6
(ASX., 2018).............................................................................................................. 8
Computation of the Price earnings Ratio............................................................................8
Rank the ten investments in order of desirability............................................................10
Which investment of the ten would you select...............................................................13
Why the investment option selected............................................................................13
Task-2.................................................................................................................... 13
Research and summarise some interesting facts about Warren Buffet......................................13
Task 3.................................................................................................................... 16
Compare Warren Buffet’s approach to share valuation and the share valuation methodology.........16
Share valuation Methodology.................................................................................... 17
Conclusion.............................................................................................................. 17
References.............................................................................................................. 18
Appendix................................................................................................................ 20

Financial Analysis of the Companies 3
Introduction
Investors are the persons who invest their capital in company with a view to create
value on their investment. The main factors which are considered by investors are the return
available on the invested capital and risk associated with the same. In this report, different
valuation methods have been used to evaluate the share price of different companies. All the
companies have been selected from the information technologies business sector, energy
sector and financial market sector. In the end, comparisons between the Warrant buffet
valuation theory and dividend discount model and PE ratio has been done.

Financial Analysis of the Companies 4
Task 1
Answer to question no-1
Use of equity valuation method
In this 10 selected companies has been selected and by using the Capital Assets
Pricing model the share price of these companies have been computed (Yahoo finance,
2018).
CAPM Method
RF Risk free rate of return
RM Market premium
Beta risk of the Company
Cost of equity RF+(RM-Rf)B
PARTICULARS
PRICE
OF
SHAR
ES
GR
O
WT
H
COST OF EQUITY
Computed by using
the CAPM model
RISK FREE
RATE OF
RETURN
B
E
T
A
MAR
KET
RATE
INFORMATIO
N
TECHNOLOGY
COMPUTERSH
ARE LIMITED
17.57 -
0.28
7% 2.77% 1.
04
6.5%

Financial Analysis of the Companies 5
%
WISETECH
GLOBAL 13.25
0.15
% 12% 2.77%
2.
39 6.5%
Altium 22.28
1.67
% 6% 2.77%
0.
82 6.5%
ENERGY
BHP Billiton 50.3
-
0.10
% 9% 2.77%
1.
29
15 7.7%
CALTEX
AUSTRALIA
LIMITED 30.5
2.11
% 7% 2.77%
0.
91 7.7%
WORLEYPARS
ONS LIMITED 17.44
1.99
% 11% 2.77%
1.
69 7.7%
APAC COAL
LIMITED 2.43
0.83
% 26% 2.77%
4.
82 7.7%
FINANACIALS
COMMON 70.94 - 8% 2.77% 1. 8.2%